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The Worm in the Apple Scarce Money, Debt Slavery, Tax and Uncertainty something can be done by Stephen Cook


The Worm in the Apple by Stephen Cook

Copyright © Stephen Cook All rights reserved. Anyone wishing to make copies of this book and circulate it has the author’s permission to do so, provided the content and its cover are not altered or amended in any way

Stephen Cook

ACKNOWLEDGEMENTS My heartfelt thanks go to: My wife Dominique My children Siobhan, Sinead and Liam And to the following gentlemen from whom I learned….well, just about everything: My best friend, L Ron Hubbard * My mentor, the late great Dr Edward Hamlyn of Plymouth, England * Michael Rowbotham, the UK’s greatest economist, who wrote the highly recommended “Grip of Death” * Graham Still for his wonderful documentary, the Money Masters (available on the Internet)

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The Worm in the Apple by Stephen Cook

Contents

Introduction

Page 5

Chapter One: What is Money?

Page 7

Chapter Two: Fleecing the Flock

Page 35

Chapter Three: The Great Money Hoax

Page 147

Chapter Four: Globalization

Page 217

Chapter Five: Saving the Earth

Page 267

Chapter Six: Age of Prosperity

Page 305

Chapter Seven: Closing Message

Page 357

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The Worm in the Apple by Stephen Cook

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The Worm in the Apple by Stephen Cook

INTRODUCTION This book is a companion to “Lift the Burden,” which I wrote in an effort to propose a new political philosophy that is a real alternative to the con game to which we are daily subjected. One of the proposals in the manifesto that comprises the second half of that book is a complete reform of the money system because the hidden, underlying cause of the trouble we are having economically is a fraud, a hoax satanically clever and global in proportion. There was not room in “Lift the Burden” to explain the hoax in full and it was clear that another small book was needed so as to explain it thoroughly. It takes a bit of explaining. Yet it is very important that the ordinary citizen understands the hoax because he is the victim of it and when the people no longer have the wool pulled over their eyes, freedom and stable prosperity will become possible for them. In putting this book together, I made use of a series of notes and articles I wrote about ten years ago; some of the figures and so forth are therefore a little out of date so bear that in mind as you read what I have to say. The basic nature of the hoax, however, remains unchanged and in fact the situation and the figures are a lot worse than they were at the very beginning of the century. This is not a learned tome on economics and you don’t need a background or degree in economic to understand it. I have gone for a basic outline of the scam and steered clear of jargon and gobbledygook as much as I can. This is an effort to help the ordinary guy understand something that affects his life intimately but which is usually hidden from sight behind layers of complexity. Hopefully it will give you enough data to be able to see through the shysters and con men the next time they try to sell you a bill of goods. You will see that there is an awful lot that can be done to make this a better world for all of us. And as I put this book together, the dire economic and political condition of human civilization attests in the strongest possible terms that people the world over need explanations, fresh ideas and some workable solutions. And they need them now! I sincerely hope that I have been of some help in that regard.

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The Worm in the Apple by Stephen Cook

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The Worm in the Apple by Stephen Cook

The Worm in the Apple

Chapter One

What is Money?

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The Worm in the Apple by Stephen Cook

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The Worm in the Apple by Stephen Cook

FOOL'S GOLD

"A long habit of not thinking a thing wrong, gives it a superficial appearance of being right" Thomas Paine.

What is money? Seems like a daft question; everybody knows what money is! Everybody knows what gold is too but in the old American West there was an iron compound known as Fool's Gold whose superficial resemblance to gold could fool those who did not know the real McCoy well enough. So it is with money. Its definition is not known well or thoroughly enough and as a result we are all, as you will see, being taken for a ride. I don't think Thomas Paine had our money system in mind when he said the above words but they certainly apply to it. We have a long habit of not thinking there is anything wrong with "money" as we know it and so it has a superficial appearance of being right. There is an almost universal awareness that there is a great deal wrong with our modern economies but those malfunctions that give us a hard time are almost always blamed on something other than money itself. The fact that the world’s financial mess is getting worse tells us that thus far we have not addressed the right “why” for the situation. If we really knew the basic cause of the problems we are having, we would be able sort them out and make things more orderly, wouldn't we? On the other hand, if one blames a problem on the wrong cause and tries to handle that wrong cause, we don’t get a resolution of the problem: we just get deeper in a mess. For example, if the car coughs and splutters and stalls and just won’t run right because we put the wrong fuel in the tank – kerosene when we should have used gasoline - but we blame the over-full ashtray, emptying the ash tray doesn’t fix the car. If we blame the distributor, take it apart, fiddle around with it, replace it and so forth, the car still won’t run. If we strip down the engine, re-bore the pistons, replace the head gasket, tighten the fan belt and give it a good kick, we get over-worked, upset and covered in oil but we still don’t get the car running the way we just know it should. In the end we conclude the car is no good, or cars in general just can’t be expected to behave and buy a bicycle. All because we did not identify and handle the true cause of the problem: we’re trying to run it on the wrong fuel! -9-


The Worm in the Apple by Stephen Cook Maybe we don’t suspect that the fuel is the problem because the guy who sold it to us swore blind it’s really gasoline and it looks a lot like gasoline. But it isn’t gasoline, even though it was advertised as gasoline and we’ve been referring to it as gasoline. So it is with what we currently refer to as “money.” When we take a long hard look at it, we discover that someone has been selling us kerosene masquerading as gasoline. “Money” as we know and love it turns out not to actually be money at all but something else, a counterfeit. And the reasons why the economic car coughs and splutters, gives off black smoke and frequently conks out in the middle of the freeway becomes clear. But how can we spot a counterfeit unless we know precisely what is the real McCoy? That has been the crux of Man's problems with money. Lack of a clear definition for it - one that all men, not just the “experts” can think with - lack of a clear understanding of how it is supposed to work, has enabled us all to be systematically hoodwinked. This is so much the case that, hidden in plain view, a clique of unscrupulous people have been operating a money scam that creates all manner of problems for us and sets our children up to inherit even bigger problems in the future and hardly anybody even objects! The key to fully understanding the fatal flaw in our money system and how to correct it and get our economies working for rather than against our survival, is first to fully understand money. Fortunately that is not difficult. It has been made to look difficult, so that people in general will be discouraged from it. But it isn’t. It is worth really looking this over and getting a thorough grasp of it because the more thoroughly we understand money, the harder it will become for shysters to line their pockets at our expense.

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The Worm in the Apple by Stephen Cook

MONEY: WHAT DOES THE WORD MEAN?

So universal has confusion as to the word "money" become, the compilers of some dictionaries seem to be affected by it. I looked up "money" in two dictionaries selected at random and found that the Oxford Reference Dictionary (1986 edition) defines money as: "the current medium of exchange in the form of coins and bank notes." This is clearly a false definition because our current medium of exchange is not confined to coins and bank notes; in fact it is only about 3% coins and banknotes! The rest is electronic money, numbers in computer memories. The Chambers Dictionary (1993) does little better, defining money as "coin, pieces of stamped metal, used as a trading medium; any currency used in the same way." It defines currency as: "that which circulates, esp. the money of a country." Which kind of goes around in circles and isn't very helpful. Anyone using either of those dictionaries is going to have a hard time getting a definition - a full statement of the meaning - of the word "money." Let's take the matter into our own hands and make a start by agreeing that money is "something which is used as a means of exchange." We define "means" as "that by which a result is brought about" (Oxford Reference Dictionary) and "exchange" as "the act or process of giving one thing and receiving another in its place" (Oxford Reference Dictionary). Money therefore is something used by people so that exchange between people can easily be achieved. I insert the word "easily" because, before money was introduced, people exchanged products - material goods and services rendered - directly, and this direct exchange became less easy as civilization advanced. Before the invention of money, Joe would agree to give Tom a bushel of wheat and Tom in return would agree to help him round up the sheep, a direct exchange we know as barter. However, human societies advanced and became more complex; they evolved an interdependency of specialized tasks and produced a greater variety and sophistication of products, and barter became too clumsy. Exchange remains the fundamental of economic activity but an intermediary step has long since been introduced into the process: money. Civilization would have been impossible had simple barter remained the only method - 11 -


The Worm in the Apple by Stephen Cook of exchange and a more flexible and versatile way of distributing the fruits of human endeavor had not been introduced. For example, imagine taking a taxi ride into town and then offering the taxi driver a chicken or an electric toothbrush in exchange for his service. What would happen if the taxi driver didn't need a chicken or an electric toothbrush? What if the ride were only worth half a chicken or two thirds of an electric toothbrush? How would he give you change? And how could you lug around chickens, electric toothbrushes and whatnot every time you go shopping? Long before we reached the sophistication of taxis and shopping malls, Man found that something more workable than simple barter was needed. Someone had the bright idea of introducing a system of tokens that would be used to represent or stand proxy for actual goods and services. Such tokens could be small, easy to carry around, and conveniently stored. The idea was that tokens could be exchanged back and forth in place of the real things they represent, then exchanged for real things at any time one wants. Problem solved. The English word for such a system of tokens is "money," from the Latin word "moneta", meaning "mint." But what could be used as one's system of tokens? Well, although some things, as we shall see below, are not really very suitable, Man has quite a broad choice as to what he will adopt for the purpose, provided people agree on what they are going to use and keep that agreement going. People are, by observation, happy to accept tokens instead of real goods and services if there is such a strong agreement and they can have trust and confidence that other people subscribe to the same agreement and will in turn accept those tokens in exchange for their goods or services. When we look back at history we discover that a variety of items have indeed been used as tokens: leather discs in medieval Europe; dried yak dung in Tibet; in England notched sticks of wood were once successfully used for over seven hundred years; in Germany after World War Two cigarettes and tins of coffee were used for a while as a crude form of money. Two of the most suitable and hence commonly used systems of tokens have been metal discs with a design stamped into them (coins) and pieces if paper with pictures on them (notes). In modern times, alongside notes and coins, we now use numbers registered in computer memories with a ÂŁ or $ sign in front of them (electronic money). All these systems of tokens work because there is broad agreement among the participants that they represent real goods and services - and because people have confidence that they will continue to be exchangeable for real goods and services at any time they wish. - 12 -


The Worm in the Apple by Stephen Cook Therefore, when the taxi driver accepts the five pound note you offer him for his service, both you and he recognize and accept - without even thinking much about it, so ingrained has the commonly held idea become - that that piece of paper with a complex but recognizable design on it is something that can be exchanged for a certain amount of real goods or services. And you both have confidence that other people will hold the same idea and accept the note in exactly the same way. Thus we have two things: (a) the object, the token, which acts as a recognizable symbol representing (b) an idea, which is backed by confidence. The five pound note you offer the taxi driver is just a piece of paper, it is the idea we humans attach to it that gives it its value and its power. Without that idea, the taxi driver would just stare at your piece of paper blankly and say: "What's this?" Our piece of paper may have other uses (lighting cigarettes perhaps?) but if there is no agreement rendering it our means of exchange, its value will then derive only from those other uses. Our notched sticks might make good firewood. Our gold might still have a value in that it can be made into jewelry. Our yak dung can be used as manure and our silver used to make fancy cutlery but those uses and the value derived therefrom are entirely separate from the importance our material acquires when it is adopted as a means of exchange. Gold, for instance, is just a metal. We can't eat it but if we adopt gold coin as our means of exchange, we can obtain access to food if we possess gold because gold can be made into gold coin. It is this idea that gives gold coin or any other token this immense additional value to us: it is our means of access to the wealth created by the communal effort of a civilization. We can summarize money by saying that it is a symbol which people are confident they can exchange for goods and services.

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The Worm in the Apple by Stephen Cook

WEALTH AND MONEY

It is important we distinguish between wealth and money. Wealth is cars, houses, food, clothing, telephones, dental treatment, medicine, holidays, restaurant meals and so on. It is actual things or actual services created or provided by people as individual producers or in co-action with others as part of a group. Money however is just paper, metal discs or electronic numbers: you cannot eat or wear it, nor even make a serviceable shelter out of it but it can be used to acquire the wealth created by others.

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The Worm in the Apple by Stephen Cook

HOW DOES SOMETHING QUALIFY AS MONEY?

If we wish to use something as money and we wish it to work properly and well as our means of exchange, then it must satisfy certain conditions. Condition one: agreement and confidence. The first condition for any system of tokens, which we give the label "money," is that there must be broad agreement that that is what we are using, and there must be confidence in it. Governments can firm up that agreement by enshrining a particular system in law, essentially bolstering the confidence by giving it the full backing of the state and penalizing people for not sticking to the agreement. Condition two: stable value. The second condition that needs to exist is that exactly how much goods and services a token can be exchanged for - its value must be known, stable and predictable. This somewhat conflicts with our experience because all we have ever known is money that is not stable in value. There are those who make vast profits from the instability of money and so have a vested interest in the rest of us thinking that "that's just how money is". The fact of the matter is that money performs its function poorly to the degree that it is unstable. We must be able to know that a token will buy a loaf of bread or four tokens buy a chicken and so forth. If a token will buy a loaf of bread today but a different amount of bread tomorrow, one loaf in Los Angeles but only half a loaf in Las Vegas, our taxi driver will not know how many tokens to charge us for the ride because he does not know how much he will be able to buy with them. If, too, he knows that the purchasing power of the token is likely to fall at any time, his confidence in it is undermined. Similarly, when we pay him for the taxi ride, if we do not know how much our $5 note will buy once we have parted with it, we cannot know whether we are being charged fairly for the ride. We and the taxi driver would be in the position, so to speak, of trying to exchange produce for produce without knowing how much goods each is offering the other. The system becomes unworkable and confidence in it is eroded – and people become upset - to the degree that the purchasing power of our token becomes unpredictable. Condition three: someone has to create it. Clearly, tokens will not spring spontaneously into existence of their own accord: somebody has to produce them and get them into circulation. - 15 -


The Worm in the Apple by Stephen Cook That somebody must be clearly identified and charged with the responsibility of producing and getting into circulation our tokens, bound by specific rules as to the discharging of that duty and their actions open to public scrutiny so that everyone can see exactly what they are doing. Clearly, having lots of different people creating and circulating tokens of different designs and values more or less as they feel like it, would render the means of exchange a very unstable and unpredictable system, undermining the agreement and confidence upon which a workable money system depends. Condition four: a service to the community. Whoever produces tokens and supplies them to our economy should not have the right to spend or lend the tokens he produces for the acquisition of personal wealth. He should only create and supply tokens as a service to the economy. While he should, as needed, be suitably paid for that service, the tokens he produces must not be for his own use.

If Joe has the job of producing tokens for the economy - for example silver alloy coins turned out on a machine - and produces, say, ten billion a year, he clearly should not have the right to lend them out at interest or spend them so as to enrich himself - otherwise he is going to wind up owning everything in the economy, without creating any wealth himself! For the same reason, tokens should be something not just anyone can reproduce or find lying around. For example, acorns or blades of grass would make extremely poor money because anyone can lay hands on them by the million just by picking them up off the ground and spend them without actually having to create anything that adds to the wealth of the community. Such tokens would soon become worthless because their entry into circulation would not be linked to or governed by the production of wealth. Condition five: acquiring tokens. This brings us to a further condition: because the purpose of the tokens is to facilitate the exchange of products for products, the only way one should be able to acquire tokens, as a general rule, is by receiving them in exchange for some goods or some service one has produced. The possession of tokens enables one to acquire what others have produced, so acquiring them without having produced anything puts one in a position of charity or theft. This is not a hard and fast rule, naturally, because there are such things as gifts, inheritances and lottery wins but even here the smooth functioning of a money system would break down if the acquisition of money through gifts, inheritances and lottery wins became too prevalent because the larger the number of people able to acquire wealth without producing any, the heavier the burden upon those who do produce all the wealth of the society - 16 -


The Worm in the Apple by Stephen Cook

In fact, even in such cases there is usually some kind of exchange given in return for money: filial loyalty, kindness or friendship earns a gift or inheritance and participation in a broadly agreed-upon game and the willingness to risk the loss of one's own stake to the benefit of the lucky winner earns the very slim chance of a lottery win. It does not much matter what product or service one gives in exchange for money, only that it is something someone else considers to be of value, wishes to acquire and so will hand over money in order to do so. Condition six: make money by creating wealth. In a rational system the way any person or group would acquire money would be by producing something and receiving money in exchange for it. In other words, the person or group produces wealth and in so doing adds to the general wealth of the community in some way. He takes what he has produced, does not consume it himself and provides it to someone else to consume. In exchange, he receives money which then enables him to acquire from others what they have produced and which he himself has not produced. The way an individual or group acquires wealth is by producing something of exchangeable value and the way one becomes rich is by some form of productive enterprise that enriches the human community. To the degree the human economy falls away from that ideal, it becomes less just: those who create wealth discover that those who produce nothing have a bigger and bigger slice of the pie and experience this unfairness as a burden. When carried to the extreme we have a slave society in which those who create the wealth (the slaves) have none if it and those who produce nothing (the slave masters, aristocrats, international financiers, call them what you will) take all of it. How can one contribute greater wealth to the human community in order to become wealthier in exchange? Sometimes it is done simply by making something that others want or providing a service that others want, by spotting a need and satisfying it, by inventing some product that adds something new and valuable to the wealth of the community or by technological advance that enables more to be produced for less effort, new resources to be utilized, wealth to be transported or communicated (distributed) more swiftly and so on. Almost everyone in the society is engaged in just this activity, from bus drivers to bell boys, accountants to artists, dentists to disc jockeys: producing something that did not exist until the moment he produced it, which is desired, valued or needed by others, and so contributing to the overall wealth of the human community - and receiving money in exchange for it. - 17 -


The Worm in the Apple by Stephen Cook This applies to any producer: the doctor, the accountant, soccer player, radio disc jockey, plumber, bus driver, checkout clerk, cinema usherette, nurse, priest, artist, road sweeper, business manager, entrepreneur, prime minister and so on, almost ad infinitum. In a less than perfect world there are those who produce wealth and do not receive money for it: the charity worker and housewife being prime examples. On the other, darker, side of the coin there are those who produce things that are not wealth - and in fact by damaging the well-being of people, detract from overall wealth - and receive money for it: drug dealers and medical charlatans being cases in point. And there are those who simply acquire money without producing anything at all, for instance thieves and currency speculators. To the degree that these latter categories are permitted to grow in number and impact, the smooth working of the money system, not to mention justice (to which a correct money system is harmoniously attuned) will be impaired. We are living through just such an example of this at this writing. All honest people acquire money by producing something (goods or services) in exchange for it and all other ways of acquiring money can be regarded as charity or theft. I should point out, in case there is any misunderstanding, that receipt of money through methods such as pensions is neither charity nor theft. A person's pension is earned by a lifetime of producing goods and services - work, raising children, paying taxes and so on. It can be seen from this ideal money system that, so long as it remains the property and domain of honest men, money will facilitate and reward the supply by humans to humans of what is needed and wanted by humans and it naturally propels economic activity towards the maximum use of material and intellectual resources for the creation and distribution of abundance. This is not to say that correct money will of itself and quite mechanically bring about a just and egalitarian society; it is not a cure-all for the world's ills. Common sense, human decency, honor, justice, honesty, ingenuity, sound organization, eternal vigilance on the part of men of good will and plain hard work are what produce a decent civilization and a correct money system must be allied to them. Each, in other words, facilitates and bolsters the other. Condition seven: there must be enough of it. Tokens must always be in sufficient supply for them to be able to do their job. But what constitutes "sufficient?" There is a balance which must be struck here. Our tokens, our pounds, dollars, yen or euros, must be abundant enough to be usable as a means of exchange and just scarce enough that people are encouraged to produce wealth in order to acquire - 18 -


The Worm in the Apple by Stephen Cook them - the whole purpose of money being to facilitate exchange, which includes stimulating or encouraging the production of goods and services to be exchanged. This means that whoever has the responsibility of supplying our economy with money must be able to produce more money easily enough so as to respond quickly to an increased need for it. Increased need occurs as the quantity and variety of goods and services being produced and offered up for exchange increases - in other words, as the economy expands. People have to be able to get their hands on the tokens that are being used as their means of exchange and pass them around in a volume that matches the amount of exchange of goods and services they wish to carry out. As an extreme example, imagine that the entire UK's money stock consisted of only one hundred one pound coins: the coins would be far too scarce and far too difficult to obtain and would fall in volume too woefully short of the day to day traffic of goods and services to be able to perform their function. And if these coins were the only form of money in use, exchange, economic activity, would grind to a halt. No matter how technologically clever we may be, no matter the range and volume of wealth we are able to create, all that ingenuity would become merely unrealized potential in the absence of a functioning money system. Once a system of tokens has become established and we come to depend upon it, a failure to ensure that sufficient tokens circulate cripples trade and renders the consumer unable to buy goods even though he wants them and the producer unable to sell goods even though he can produce them and the consumer wants them. A reduction of the amount of money circulating is called deflation and if the money supply deflates below a level where it can support the amount of exchange of goods and services that people are trying to carry out, we have what is called recession - a slow-down or restriction of economic activity due to a relative scarcity of money. Where that money scarcity becomes pronounced or chronic we have a severe economic slow-down known as depression. Such slow-downs are experienced by industry as a "fall in demand." Usually however, a “fall in demand� is not a fall in the desire of human beings for goods and services that has occurred. Money is the means by which people express their demand or desire for goods and services and when money becomes scarce, then to that degree people's ability to express demand has become constricted. In a severe depression, for example, people stop buying food but nobody can claim they no longer wish to buy it. All that has occurred is that many people are no longer able to lay their hands on enough tokens with which to express their demand for food. Historically, where severe money shortage has plunged the economy into depression, we have witnessed the tragedy of homeless people starving next to the empty homes from which they were evicted and fields full of crops that are being - 19 -


The Worm in the Apple by Stephen Cook allowed to rot because they cannot be sold! The food is still there, so are the farms and the farmers want to sell the food to people who want to buy it. The homes are still there and landlords want to rent them to people who want to live in them but the producer cannot sell and the consumer cannot buy because one thing is missing: the tokens they need to carry out the exchange.

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The Worm in the Apple by Stephen Cook

LOOK AT IT THIS WAY....

Imagine, for the sake of illustration and quite arbitrarily, that a loaf of bread represents one unit of production, a chicken five units, a car ten thousand units and that by this system of reckoning the entire economy's production of goods and services adds up to a total of 10 billion units of production. Imagine too that we are using a system of tokens as our means of exchange where a single token is assigned the value of one unit of production: that is one token can be exchanged for a loaf of bread, two tokens will buy two loaves, four tokens will buy a chicken and ten thousand tokens will buy a car and so on. If our imaginary economy has 10 billion tokens circulating in it, there will be enough tokens for all ten billion units of production to be bought and sold. Suppose that one day the number of circulating tokens is reduced from ten billion to eight billion. There are now two billion units of production that cannot be sold no matter how much producers want to sell them and consumers want to buy them. The economy's producers will experience greater difficulty in selling their products and some are going to be unable to sell all the goods they produce or the services they provide. There will be a restriction of two billion units-worth of economic activity. There will then occur an intensified competition amongst producers to capture tokens that are too scarce to go around. If the unsold goods are to be sold and remuneration obtained for them, then many producers will find it necessary to drop their prices in response to the reduced spending power of the consumer. Previously there were ten billion tokens available with which to bid for ten billion units of production. Now only eight billion tokens have to do the same job: that is, on average, 0.8 tokens per unit of production, or one token buys 1.25 units of production. The purchasing power (value) of our token has risen because tokens have become more scarce. That the "token in your pocket" will now buy more sounds great on the face of it but of course we have, on average, fewer "tokens in our pocket" to spend. In such a situation, those rich enough to amass savings or those such as money lenders to whom other people owe money will benefit because the purchasing power of saved money or returned loans (which have to be returned come what may) has increased. Although deflation of the money supply brings hardship to both producer and consumer, and in so doing undermines the trust, confidence and stability of value - 21 -


The Worm in the Apple by Stephen Cook upon which a money system depends if it is to work properly, it can be a boon to those who lend money and those who possess large amounts of surplus money.

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The Worm in the Apple by Stephen Cook

INFLATION

Increasing the volume of tokens in circulation is called inflating the money supply. Increasing the money supply to match an increase in the volume of production and the traffic of goods and services being exchanged is vitally necessary so as to ensure that money does not once again become relatively scarce. For example, if the total number of units of production in the imaginary economy mentioned above increases to fifteen billion for some reason but the number of tokens remains at ten billion, five billion units of production cannot be exchanged and there is now only one token available to bid for every 1.5 units of production. If however the number of tokens is also increased to 15 billion, the purchasing power of the token remains stable at one unit of production. However, if the number of tokens circulated is in excess of the level of production, we have another problem: too much money chasing too few goods. For example, if the economy produces 10 billion units and the amount of money increases to 20 billion tokens, there are now two tokens available to bid for every unit of production: two tokens to buy a loaf of bread where one token would buy a loaf of bread previously. The purchasing power of our token has, in other words, halved. For the producer, that means every token he receives for the product he sells is worth less, his profits are worth less, the wages he distributes are worth less. For example, an annual income from sales of, say, ten thousand tokens now has less value in terms of what it will buy, than previously. To restore the purchasing power of his income to its previous level, the producer must increase his prices and, as there are now twice as many tokens circulating there is "room" for him so to do. There is an upward pressure on prices. The consumer finds that, say, an income of 400 tokens per week will now buy half what it did previously and so to restore his spending power to its previous level and avoid becoming poorer, he will wish to increase his income to 800 tokens per week. Alongside the decline in purchasing power of the token, the upward pressure on prices and an erosion of the purchasing power of people's savings, there will tend to be an upward pressure on wages. Here again, the fundamental condition of a stable, predictable value for our token is violated; the result: confusion, distress, the undermining of confidence and a hindering rather than a facilitating of exchange. The entire function and purpose of money is to facilitate and support smooth exchange. - 23 -


The Worm in the Apple by Stephen Cook That is its only valid purpose. Where the value of money fluctuates and is not stable and prices are consequently pushed upwards or downwards, then here is irrefutable evidence of a failure to ensure a correct volume of supply of money to the economy: whoever is charged with that duty is quite simply getting his sums wrong and in so doing perpetrating a great disservice to the community.

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The Worm in the Apple by Stephen Cook

CALCULATING THE VOLUME OF MONEY SUPPLY

In order for the money-supply authority, whoever that may be in the society, to be able to calculate how much new money to introduce into the economy, the value of money, the purchasing power of the individual token, must be stable. If it is not stable, if it fluctuates from day to day, if it represents one unit of production on Monday but two units of production on Thursday and one and a half units by Saturday, it becomes impossible for that authority to accurately calculate the quantity of money the economy requires. Therefore if four tokens buy a chicken and four loaves of bread today, they must buy a chicken and four loaves of bread tomorrow and the next day. This then pinpoints the principle by which one can calculate the economy's money requirements and the anchor by which the economy can be kept stable: the purchasing power of the token in relation to comparable goods and services must be kept as stable as possible. Too much money in circulation pushes its purchasing power downwards; too little money in circulation pushes its purchasing power upwards. If the overall purchasing power of money begins to rise, if there is a constriction of the ability of industry to sell and of the consumer to buy and prices are pushed downwards, then we know that money has become too scarce. Too little money has been supplied to the economy to smoothly facilitate the existing level of production and exchange within it: an increase in the supply of money to the economy is required. If the overall purchasing power of money decreases, pushing up prices and wages, then we know that the economy has been oversupplied with money and some way to increase production must be found or money removed from circulation. Sound management of the economy's money supply therefore demands increasing or decreasing the money supply towards the goal of keeping the purchasing power of money constant. That stability of money's purchasing power becomes the barometer by which one can measure relative success or failure in the task of money supply.

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The Worm in the Apple by Stephen Cook

WHOSE JOB IS MONEY SUPPLY?

Before we assign the job, we must establish the basic principles against which such an assignment will be made. Those principles, in summary, are: Money is supplied as a service to and support of the activities of the economy and for no other purpose or agenda. Whoever creates and supplies money to the economy should not have the right to spend or lend the money he has created for personal advantage or gain. In order to calculate the economy's money requirement the economy must be monitored so as to assess, with a view to correcting, any rise or fall in money's purchasing power. The aim of money supply must be to correct fluctuations in value and attain the maximum stability of value possible. The body which calculates the economy's money requirement and the body which actually creates and issues money in accordance with those calculations need not be one and the same. In fact it they should be two distinct bodies. It is essential that money supply calculation be impartial and in accordance with a consistent formula. Its sole purpose should be to ensure the correct level of supply and so whoever is responsible for the task must be aloof from and protected from any political or other extraneous influences. That protection must be uncompromisingly enshrined in law. The amount of money created and supplied to the economy must be solely in accordance with those calculations. No government should have the power to create and issue money in accordance with any other criteria whatsoever. It is self-evident that whoever has the power to decide how much or how little money will be supplied to the economy has the power to regulate the fortunes of all the people in that economy. He has in fact absolute dominion over those people. However, those calculations only govern how much new money is to be created or by how much the volume of circulating money exceeds the economy's requirements. In the case of spending new money into circulation, how government will spend the money must be bound by the mandate it has received from the people. In the case of a surplus of circulating money, whether government's method of dealing with the problem will be to increase production (and how) or remove excess money from circulation (and how) or some combination of the two, will again be bound by the mandate it has received from the people. These conditions absolutely must be in place and there is no room for compromise: - 26 -


The Worm in the Apple by Stephen Cook that way, we will have, and with vigilance retain in perpetuity, absolute power over ourselves. It is clear then, given the inherent power of money and its indispensability to civilization, that open democracy is not an optional luxury but vital to the health and safety, the peace and prosperity of our societies; it is not so much an idealistic position as an entirely pragmatic one: it is a matter of personal survival Anything less than full democracy not only places all of us in real danger from he who would control the business of money, but it opens the door to the corruption and debilitation of money and thus the eventual debilitation of production and exchange.

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The Worm in the Apple by Stephen Cook

GETTING NEW MONEY INTO CIRCULATION

How can such a government get the new money it creates on our behalf into circulation? Simple: by spending it on public works and providing services to the people. Specifically what government will spend new money on will depend upon its priorities, philosophy and social orientation and that in turn will, in a democracy, depend upon the mandate it has received from the people. An alternative method of getting new money quickly into circulation, and one which many favor, is by paying it directly to the citizenry so that the citizens of the nation can then go out and spend it on the increased goods and services that are now available in the economy. The essential principle is that new money is spent into circulation and never loaned. It is provided as a service to and support of the production and exchange - the economy - of the nation as a whole. As to which method is used would be a matter for the mandates of various parties and for the people to decide. It becomes, as Abraham Lincoln pointed out, government's greatest creative opportunity. Once spent, for example on hiring men and machines to build a highway, provide a rail system, a space program, environmental project, grants or subsidies to industries, state pensions, or as a stipend paid direct to each citizen, new money will circulate in the economy. No-one in government will personally amass wealth from the process of creating new money but the people will get a much-needed new road, hospital, pension or boost to employment and money will circulate. The above-mentioned condition that no-one should personally amass wealth from his right to create money will not be violated. It should be stressed that we refer here to new money, created and circulated so as to increase money supply in line with economic growth. This is additional revenue for the government quite separate from whatever it raises in taxes. But what of a situation in which a reduction of money supply is required so as to eliminate an excess of money? How could government remove money from circulation? Well, it may not need to at all because the formula for dealing with inflation becomes: increase production, reduce government spending. Smart government will be able to find ways to increase production so as to absorb the excess money and by accurate calculation of money requirements and wise policies which avoid in some way suppressing the economy's overall levels of production, can avoid ever having to deflate the money supply. - 28 -


The Worm in the Apple by Stephen Cook However, if such a need does arise, government could, for example, simply levy a tax temporarily and expunge the money it so collects. If its calculations in that regard are reasonably astute and it confines itself only to removing excess money, then such a tax would not be experienced by the people as a burden that suppresses prosperity levels. Whatever happens, the astuteness of whoever calculates money requirements and the wisdom of government in running the economy will be glaringly evident. There will, if a correct money system is in use, be a marked absence of confusion and complexity that makes it difficult for the people to see what is being done and easy for government to blame its own ineptitude on "factors beyond its control."

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The Worm in the Apple by Stephen Cook

SEPARATE FUNCTIONS

I should-emphasize here, for it is a crucial point, that calculating money supply and then spending money so calculated into the economy are two separate functions and should be kept completely separate. On the one hand one has an agency whose job it is to monitor the economy and any changes in the purchasing power of money and which then instructs government as to how much new money to create and spend into the economy. It must by law be safeguarded from any influence or interference from government or indeed any person or organization. Its success or failure in doing its job is measured only by the stability or otherwise of the currency. It may not instruct government on how to spend the money, only how much money it must create. On the other hand, one has government which must be bound by law to obey the aforementioned agency’s instructions on quantity of money supply but be bound only by its mandate, constitutional duties and the promises made to the electorate as to how it spends the money. Unless one separates these functions, it becomes too easy for government to print money on the basis of political expediency rather than the economy’s actual need for it and one runs the risk of irresponsible governments printing money wily nilly and causing thereby runaway inflation. This is something that governments have been guilty of in the past, which is used as an argument for taking money creation out of government’s hands. It is, however, not an argument for then delivering it into the hands of private-profit concerns, which if you refer to Condition Four above and read on, will become clear.

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The Worm in the Apple by Stephen Cook

SO WHAT ARE OUR TRUE ECONOMIC LIMITATIONS?

The limitations upon what any person, group or nation can produce are its resources, know-how, manpower, ambition, willingness, energy and desire. And even those are not absolute because human ingenuity and inventiveness, Man's considerable ability to solve problems, consistently pushes the ceiling higher. We should beware of compromising with our goals and dreams with considerations of "it can't be done" because, in the end, it probably can. If the demand or desire for something exists, if the technological means, the human and material resources and the willingness to do it exist, then there is no reason for it not to be done. In such circumstances it makes no sense for "lack of money" to prevent it being done. Money's purpose is to facilitate that production, to enable that demand and those resources to come together through the interaction of human exchange. If things are not getting done simply because there is "not enough money" then there is a need to create more money, or even to introduce a properly functioning money system. New money must in such a situation be introduced until all those desired and physically possible things are encouraged and can get done. It is a dereliction of duty on the part of government to permit problems of money scarcity to constrict production below the level of what is desired and possible. Yet, in our modern world people are without work even while a growing backlog of undone tasks accumulates; they eat poor quality food even while it is entirely possible to produce wholesome food; road and rail systems crumble even though they could be far better built; nations import goods they could quite easily make themselves; consumer items are built to last two years where they could be built to last twenty; we use "dirty" fuel and power sources while the extant know-how for better sources is neglected and environmental dangers accumulate, even though we have the technological means to solve or avoid all of them. Boy do we suffer from a scarcity of money!

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The Worm in the Apple by Stephen Cook

A BIG HOLE WHERE THE FOUNDATIONS SHOULD BE

In the above sections we considered in abstraction the meaning and basics of money supply. We established something of an ideal scene for money: what it is and how it is supposed to be used. Things get very interesting when we compare that ideal scene with the contemporary economy, because we discover that almost every single one of the common sense fundamentals we have discussed is missing. We can summarize the existing system as follows: in the modern economy almost all our money is created and gotten into circulation by private-profit banks as interestbearing loans. How does this system compare with the criteria for a correctly functioning means of exchange? Stable Value: in the modern economic system money does not have stable value. It continually declines in value. In fact the peculiarities of debt-money mean that it combines the worst attributes of over- and under-supply that one would find in a true money system: money manages to be both perpetually scarce and decline in spending power! Personal Gain: Money should not be created for personal gain. Banks create and lend money. The privilege of being able to create out of nothing and lend money that must be repaid to them at interest establishes private banking corporations as the owners of almost all the money in circulation. By charging interest on money loaned into circulation, banks are afforded a unique privilege of making private profit from the issuance of the means of exchange. Exchange: The way to acquire money is through exchange for producing something that contributes real wealth to the human community; banks create money but do not create wealth. Through interest on the lending of money they create out of nothing, banks acquire money, and thus the means to acquire and accumulate the wealth created by others, without themselves contributing any real wealth top others in return. The system of producing debt and calling it money has spawned an elite of money manipulators who buy and sell debt and manipulate the value of money (and so have a vested interest in the instability of money) in order to make more money. Banks, international "investors", currency speculators and dealers in various forms of IOU (bonds, shares and so on) produce no wealth yet accumulate the wealth created by honest producers. That they have posh suits and swanky offices does not change the fact that they consume wealth and do not produce any. We can all spot, and with - 32 -


The Worm in the Apple by Stephen Cook justice roundly condemn, a dole scrounger, yet here is a section of the community which constitutes a far heavier parasitic burden carried by the rest of us. Sufficient Supply: Money has to be in sufficient supply to facilitate smooth exchange; debt-money economies experience a continual insufficiency of spending power - we will explain why in subsequent chapters - which makes it difficult for industry to sell all it produces and for the consumer to express the fullness of demand. The economy's requirement for money should be calculated so as to ensure sufficient supply. Debt economies experience continual and often extreme difficulties establishing sufficient supply. No calculation of the economy's money requirement occurs and no principle for so calculating it exists. So far as almost all the money circulated is concerned, the principle of supplying the economy with money as a support of the economy is absent. Supply is temporary in that it is on loan and it occurs not as a support of the community but, through interest charges, as a way of making money out of the community's need for money. Rising prices, which in a debt economy are a consequence of an over-supply of debt are erroneously interpreted as an indicator of inflation (which is an over-supply of money) and dealt with by raising interest rates, that is by regulating the rate at which people are penalized for doing what in a debt economy they must do: borrowing money into circulation. Government should spend money into circulation in accordance with its democratic mandate. This does not happen. Money is supplied to the community in accordance with the banks' policies on lending. Banks have the power to decide to whom they will lend and thereby control how money is used. The purpose of their lending is their own gain, not the execution of a democratic mandate or the overall health of the community. As governments themselves are heavily dependent upon borrowing money they place themselves in a position junior to the lenders of money. Our Economic limitations should be what we have the material and human resources and desire to produce. In the debt economy perpetual money scarcity places a limitation upon what we are able to produce that is well below what we have the material and human resources and desire to produce. Money is a system of tokens which we use to represent goods and services. In the debt-economy money represents a debt. We also try to use it to represent goods and services, so we require it to do two completely different things at the same time: to stand proxy for goods and services and return to the banking sector in repayment of debt. Money which is returned to the banking sector to repay debt cannot be used to represent goods and services. It is the banking sector which has the prior claim to it and so its representation of debt is its senior function.

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The Worm in the Apple by Stephen Cook

SUMMARY

An essentially simple but extremely clever means of facilitating exchange has been perverted into something that does not work as money but works very well indeed as a means of enabling a few people to operate a get-rich-quick scam, while fooling everybody else into thinking they are pillars of the community. Using debt as one's means of exchange is disastrously inefficient, ultimately destructive of the civilization itself and quite simply is not very clever. Even using biscuits or bicycle clips as money would make more sense and do less damage. We fail to fully appreciate just how needlessly shambolic is our economy because we have lived with it for generations and so we have no better model, no ideal scene to compare it with. Our expectations have become so low that shambles is the norm and slightly less shambles looks like an economic miracle. Yet if we view our fantastic scientific and technological advance and the tools this provides us for the creation of unprecedented material abundance, the world's precipitous plunge into material poverty is a strange, inexcusable contradiction. The money system that we have been trying to use for the past three hundred years was never intended to help humankind realise the full potential of swiftly advancing know-how and thus, universally, flourish and prosper. It was introduced for the purpose of enabling a small number of people, who themselves contribute nothing of value to humanity's group endeavor, to milk everyone else of the wealth they have created. In that sense it works very well. The reason they got away with it was that nobody among the policy-makers of nations fully understood money. The reason "we" persist with such a system even though it doesn't work is that the small minority who do gain from it are determined that we shall do so. The long habit of not seeing the system as wrong has been nurtured by an economic orthodoxy in which the exact method of money creation, the precise nature of what we call money, searching analyses of the effects upon economic life of creating money as interest-bearing debt and even a correct definition of the word money itself, are omitted from our education, from text-books and even from the media. And no ideal scene for our civilization is ever delineated, lest our expectations become too high. How much longer are we going to put up with it? - 34 -


The Worm in the Apple by Stephen Cook

The Worm in the Apple

CHAPTER TWO

Fleecing the Flock A Brief History of Money

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The Worm in the Apple by Stephen Cook

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The Worm in the Apple by Stephen Cook

INTRODUCTION

A virus has invaded and is killing the host. It is evident that our economic system is not working entirely to our benefit and, like any cranky, calamity-prone machine upon which we depend, is a serious hindrance to our efforts to survive. The steady erosion of our standard of living, debt, depressions, recessions, inflation, deflation, credit-crunches, crashes, meltdowns and monetary mayhem, are the symptoms of an underlying cause. Until the cause is identified and addressed, the symptoms will persist. This essay identifies the virus and describes, in brief outline, its entry into the host and its progress as, over time, it has invaded the organism upon which it feeds. This analogy is probably not the most apt. It would be truer to say that we are the victims of a massive hoax, a scam that defrauds us of our wealth and resources and plunges us into chaos. Once you can see through the economic gibberish that justifies the closure of your business; the "credit crunch" that brings, as sure as night follows day, recession in its wake, the loss of your freedoms to monetary union, the globalization of poverty, the burden of your mortgage or the next hike in your income tax, and see the hidden truth you were never meant to know, it will become impossible for you ever to be defrauded again. But as you read this and come to understand the enormity of the fraud, realise that what you are looking at is, first and foremost, an opportunity. Once you have the knowledge of how something works, you can repair it. This is your world. Take the trouble to see how the power to shape it has been taken from you and you will know how to take it back. You don't have to be short-changed, punished by punitive taxation, enslaved by debt, ripped off by non-producing parasites and spivs gambling with the futures of millions on the stock markets, dragged into wars or mucked about by the confused idiots masquerading as your government. Aren't there a few things about your world you'd like to change? Well, why not? What else are you going to do with the rest of your life?

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The Worm in the Apple by Stephen Cook

WHAT'S BEEN GOING ON?

After World War One, the international bankers - the world's major moneylenders - had already amassed wealth so vast it dwarfed that of entire nations. In the post-war era those wealthy banking families assumed more and more control over the press and publishing industries. Put yourself in the position of an international banker. The press barons have built their empires on credit you loaned them. They are mortgaged up to their eyeballs and you could bring them crashing down any time by refusing them further credit or calling in their loans. They are going to be very reluctant to do anything to earn your displeasure, aren't they? It is hardly surprising then that, as the international banking families assumed control over the world's press and publishing industries, the once hot controversy over how precisely those families amassed their wealth vanished from public view. That vanishing act has been so thorough that very few people today are aware there ever was a controversy, that the way our money is created and controlled was ever in contention or indeed that there is anything wrong with our money system at all. Nowadays most people just blame the government as nations sink like scuppered freighters into the fetid waters of their own failed hopes or assume that decline and failure just sort of happen and that's just the way things are. But things are the way they are because someone makes them that way. If our economy and our money system consistently fail to run right, that is because someone is making them run wrong. And though the debate over how bankers managed to amass their fortunes and assume power over the economic destiny of an entire planet vanished from the media, the issues themselves were never resolved and the questions never satisfactorily answered. So we still, as a consequence, live in a world teetering on the brink of economic collapse. The problem does not go away just because somebody sweeps it under the carpet. Why is the issue of who creates our money so important? If you have read the previous chapter, you will know the answer. He who controls the creation and distribution of the means of exchange acquires complete power and dominion over all people, groups and nations who must use it in the business of living. Anyone who can create the money supply and spend it into circulation for his own - 38 -


The Worm in the Apple by Stephen Cook personal profit can wind up owning everything in the economy - without himself producing any wealth in exchange. The bankers who have the privilege of money creation know that, and they have worked very hard to protect their privilege and the unimaginable wealth and power it brings them. It constitutes what is probably the greatest and most profitable hoax of all times. James Madison, architect of the United States Constitution, writing way back in the eighteenth century, said: "History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance." So you can see this is not new news. The "money changers" - or international bankers and financiers as we know them today - have been at it for quite a while. All that has changed is that there is hardly anyone left to speak out. In the words of Larry Bates, economist and author, speaking of the United States' equivalent of the Bank of England: "The Federal Reserve [bank] really, even though it is not part of the Federal Government, ... is more powerful than the Federal Government. It is more powerful than the President, the Congress and the courts. The Federal Reserve determines what the average person's car payment is going to be, what their house payment is going to be, and whether they have a job or not. And I submit to you that that is total control." How did all this come about? How was the economic system hijacked? Why doesn't it run smoothly? This is a malady that evolved. It did not just suddenly spring out of nowhere. It has a history. Let's start at the beginning.

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The Worm in the Apple by Stephen Cook

THE MONEY CHANGERS

Two thousand years ago Jesus discovered money changers had set up shop in the temple and ejected the whole pack of them by force. He was pretty miffed by all accounts. What was that all about? Those money changers were the distant forebears of our modern bankers and everyone knows banking is a highly respectable profession. Money-changing was a lucrative profession and this dealing in currency opened the door to other lines of business: money lending for instance. But what were the money changers doing in the temple that so annoyed Jesus? Well, in those days Jews came to the temple in Jerusalem to pay homage to God. When they did so they had to pay a Temple Tax and the tax could only be paid using a particular coin. It was a coin of pure silver and at that time it was the only coin around that was pure unalloyed silver and without the head of a Roman emperor on it. It was called the half shekel. For the Jews it was the only coin acceptable to their God and thus the only one they could use to pay the Temple Tax. So before they entered the temple they would change their money for the half-shekel. This particular coin however did not happen to be plentiful. There were not great quantities of them in circulation. Seeing an opportunity to make some serious money, the money changers had cornered the market on them. Having monopolized the supply of these coins, they were able to raise the price of them. The Jews had to have them to pay their Temple Tax and so, because they could not get them anywhere else except from the money changers, were forced to pay extortionate prices for them. As far as Jesus was concerned this exhibition of greed and extortion totally violated the sanctity of God's House. So he took the money changers by the scruff of the neck and ejected them from the premises.

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The Worm in the Apple by Stephen Cook

ROME

Two hundred years earlier the Roman Emperors were already having trouble with money changers who had control of the money supply. Any economy depends on a sufficient supply of those tokens the society uses to enable goods and services to be exchanged among people and groups. If they become too plentiful, they lose value and if there are not enough of them in relation to the goods and services people are trying to exchange back and forth, economic activity grinds to a halt. Most civilizations used metal coins (usually gold and silver) as their system of tokens and where they had problems with money those problems usually arose from the coins not being in sufficient supply, particularly where populations, commerce, trade and general economic activity were growing. And of course, where there was a scarcity of the coinage - either accidental or deliberately engineered - those who monopolized the coinage could make themselves very rich very quickly. Two early emperors tried to limit the growing power of Rome's money changers. Both wound up assassinated. In 48BC Julius Caesar took the power to coin money away from the money changers and had the government of the day mint the empire's coins and spend them into circulation for the benefit of all. By making money plentiful and enabling the economy to boom, Caesar made himself very popular - with everyone but the money changers. Shortly thereafter he was assassinated. When Caesar died, so did the supply of plentiful money as the money changers took back their invaluable privilege of coining silver and gold into money. Taxes and corruption increased and usury, instability and debased currency became the rule.

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The Worm in the Apple by Stephen Cook

MEDIEVAL ENGLAND

One thousand years after Christ evicted their forebears from the Temple, money changers were at it again in Medieval England. Use of gold or silver for coins varied from time to time but as a rule coins of both metals were in circulation. These coins provided a medium of exchange that was quite stable relative to our modern money. In Medieval England there was little or no inflation, prices and costs were stable and the population, significantly, enjoyed a standard of living virtually unequaled right up to the beginning of the twentieth century when technological advance and cheap mass-produced goods made an impact on our lives. Throughout that period, the money stock grew gradually, the quantity of coins in circulation increasing naturally as mining brought new gold and silver onto the market; some of this was melted down and minted into coinage. The supply of money rose roughly in line with growing demand for it caused by increasing trade. Occasionally growing economic activity would outstrip the growth in the money supply or the money changers who monopolized the coinage would act in concert to create artificial shortages of money. When they occurred, such shortages of money created problems for commerce. There would then not be enough money in the pockets of people to pay for all the goods available in the economy: business would encounter problems in selling their products; wages and prices would fall, businesses would fail and there would be a general economic slow-down. The amount of money the Monarch could raise in taxation from a population short of money would also be hit. Another method of adding to the money stock and increasing the quantities of coins in circulation was needed. One such method was used in the reign of Henry VIII. Henry had relaxed the usury laws and the money changers were quick to reassert themselves by making sure gold and silver coins were plentiful for a few decades. The trick was to call in the gold and silver coins, melt them down and re-mint them with base metals such as tin or copper added. In this way far more coins could be issued without the need to find more gold and silver. Unfortunately, although the volume of the money stock increased, the coins themselves were worth less when used to trade abroad. Henry VIII's daughter by Katherine of Aragon, Queen Mary, tightened the usury laws again, so the money changers began hoarding gold and silver coins, keeping them out of circulation and creating a shortage of money. - 42 -


The Worm in the Apple by Stephen Cook

When Elizabeth I, Henry's daughter by Anne Boleyn, came to the throne England's economy was in poor shape. She was determined to regain control of the money system, issuing gold and silver coins from the public treasury in order to break the monopoly of the money changers. On the "advice" of her "experts" Elizabeth reversed the debasing of the currency, had as much coinage as possible called in and re-minted back into coins with higher gold or silver content. This did give England more spending power abroad but it meant that fewer coins could be put back into circulation than had been removed. The volume of money in circulation dropped sharply and England felt the full impact of a money shortage, the phenomenon we know today as a depression. Wages were forced down and so were prices. Profits were hit and poverty increased dramatically. Merchants, farmers, tradesmen and artisans all suffered. Living standards actually fell lower than those of the previous century. Merchants and farmers sought markets abroad, trading the country's produce for gold and silver and as gold and silver began to find its way into the country, the actual wealth of the county - the food, textiles and other finished goods the people created - went overseas. Money lending - usury - became an important component of economic life as it always does in a situation where there is a shortage of money. Usury had been around for a long time. In its original form it involved someone who had gold or silver lending it to someone who did not and charging interest on the loan. In this form it did not add to the amount of money in the economy. But as loans were repaid at interest or property was repossessed where borrowers defaulted, buying power and material wealth was gradually redistributed into the hands of the money lenders.

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The Worm in the Apple by Stephen Cook

TALLEY STICKS

On the whole, the Middle Ages were a period of prosperity and expansion for England and although by the end of the era instability was beginning to set in, at the end of Elizabeth 1's reign the nation had emerged as a major maritime power. Alongside the mostly stable but occasionally scarce gold and silver currency there existed another, mysteriously half-forgotten form of money that is worthy of note. It was a currency the money changers were unable to either control or manipulate and had England made more use of it, she may well have saved herself a great deal of economic trouble. Around 1100 AD, England's King Henry I had been having trouble with the money changers. England's money changers were her goldsmiths and King Henry had been resolved to remove from them their hold over the nation's money supply. What he needed was something else that could be used for money that was neither gold nor silver. He could have used anything: sea shells, bird feathers or what-have-you but what he chose was a system quite ingenious, which enabled a currency to circulate permanently out of the power of the goldsmiths. This new form of currency was in circulation for 726 years, right up to 1826 and right through England's greatest period of prosperity and expansion. This was the Talley Stick, a currency made out of sticks of polished wood. The stick was cut with notches, the number of notches indicating the denomination. It was split in two, lengthwise, creating two matching halves. The King kept one half to provide a record and to protect against counterfeiting and spent the other half into the economy as money. Why was it that for 700 years sticks of polished wood worked perfectly well as money? Money is just a system of tokens: anything can be used as that system, provided people have confidence that it can at any time be exchanged for goods. It does not matter if one uses the Talley Stick, tins of Nescafe or pieces of paper with the Monarch's picture on it. Money is just an idea in which people have confidence and which people agree to use as money. Henry created that agreement and confidence by putting his government's backing behind it. He did that by demanding the Talley Stick as payment for taxes. This made the Talley Sticks valuable and trusted. With the exception of metal coins, which date back to antiquity, no other form of money has worked so well and for so long as Talley Sticks. Paper money, for - 44 -


The Worm in the Apple by Stephen Cook instance, has been around for a far shorter time. All through England's expansion and rise to world power, the Talley Stick was in use. The money changers constantly attacked it, naturally, favoring the use of gold and silver coins. Shortly after it was formed in 1694, the Bank of England attacked the Talley Stick because it was money operating completely outside the money changers' control, just as Henry had intended.

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The Worm in the Apple by Stephen Cook

THE GOLDSMITHS

By the sixteenth century a new form of money had appeared. Instead of taking the form of gold or silver coins, the new money comprised promises written on pieces of paper. With the advent of promissory notes, a deceit entered in that enabled new money to be created and to enter existence as debt and at that point we enter the realms of serious difficulties because money ceases to be true money and becomes a counterfeit. It lies at the foundation of our modern banking system. The money changers of the time were the goldsmiths, natural enough as the goldsmiths had the premises and equipment necessary for working with precious metals. And working with precious metals, they had to have the means of storing them safely and securely. So began the practice of storing gold for other people, a service for which the goldsmith would charge a fee. The goldsmith had his vaults or strongboxes and a fee was worth paying for peace of mind. No merchant slept easily with a musket by his bed and a stash of gold or silver under his floorboards. When someone left his gold with the goldsmith for safe-keeping in his vaults, the goldsmith would issue the depositor with a receipt for the gold. If the depositor left (say) five ounces of gold with the goldsmith, he would take away with him a receipt for five ounces of gold, a promise that if he came back later and presented the receipt, five ounces of gold would be returned to him. The promissory note was therefore worth five ounces of gold. These promissory notes became the first paper money. They were easier to carry around than bags of gold. Soon people began using the notes to pay for things instead of the gold they represented and the notes passed through many hands. People were happy to accept them as payment because they were convenient and they were worth the gold they represented because one could at any time take the note to the goldsmith and exchange it for gold. The goldsmiths noticed that the notes began to circulate for longer and longer periods and people would turn up with less and less frequency asking to exchange them for the gold they represented. The goldsmiths had long been in the practice of lending out any spare gold they had at interest but now they found that, as people left gold with them for safekeeping, they had larger amounts of gold sitting in their vaults doing nothing. As people were content to leave it there for long periods, why not lend that out as well? When the debt was repaid the gold could be replaced and the goldsmith could - 46 -


The Worm in the Apple by Stephen Cook pocket the interest. Thus the goldsmith could charge both for storing the gold and for lending it out. But if everyone was happy to take promissory notes because they were more convenient, why not lend the borrower a promissory note and leave the gold safely stored in the vault? Thus the goldsmiths began lending promissory notes. But if the goldsmith gives the depositor of a certain amount of gold a promissory note then gives a borrower a promissory note based on that gold deposit, there are now two promissory notes in circulation for the same quantity of gold: one held by the depositor and one held by the borrower. This of course is a fraud. Both notes promise to pay the gold on demand but it is a promise that is impossible to keep because the same quantity of gold cannot be handed over twice. If one promissory note is honoured, the other cannot be. One of the promises is a lie and a deception. As both notes now circulate as currency, they double the amount of money in circulation at the stroke of a pen. It also means that as soon as the second promissory note was written, money was created out of nothing. Soon the goldsmiths realized that, as people rarely turned up all at once wanting their gold and as no-one had rumbled the fraud; they could extend it a bit further. If one could issue two promissory notes for the same item of gold, why not issue ten? So began the practice known as Fractional Reserve Lending. This is a respectablesounding name for a deceit and fraud that allowed the goldsmiths to lend money created out of nothing and it is still the core and foundation of modern banking. Put simply, it works like this. The banker has (say) £20 worth of gold in his vaults. He has a printer print up a promissory note for that £20 and gives it to the depositor. He then has nine more identical promissory notes drawn up fraudulently claiming to represent the same £20 of gold. This gives him promissory notes worth in total £200, while only a tenth of that amount sits in his vaults. He lends the other nine promissory notes to various borrowers, each note pretending to represent the same £20 deposit. In effect the banker is lending the same money nine times over. And for every £20 deposited he is creating £180, effectively out of thin air! The £180 created by a stroke of his pen is loaned out and circulates in the economy where it is used as money. The £180 thus lent is eventually repaid by the borrowers usually in real gold - plus (say) an additional £20 in interest. In other words the banker had created for himself the grand total of two hundred pounds out of thin air, and initially based on promises to pay gold that did not belong to him in the first place! But to carry this example further: when the borrowers repay their £180 of loans, plus £20 in interest, the goldsmith rakes in £200 that he can place in his vaults. Added to the original £20, this makes £220. But now he can use that as a reserve and by fractional reserve lending lend out promissory notes to ten times that value. He lends out £2200 at (say) 10% interest and when the loans are repaid, rakes in £2,420, - 47 -


The Worm in the Apple by Stephen Cook which added to the £220 sitting in his vaults, makes a total of £2,640. This forms the reserve against which he lends out £26,400 and so on. As time goes on of course, there just is not enough gold around for all debts to be repaid in gold. However there are plenty of promissory notes. Debts start to be repaid by borrowers in promissory notes instead. No problem. The notes are accepted as money and can be used just like gold to buy things. He can accept promissory notes as payment, add them to his reserves and lend out ten times that in more promissory notes. This is a somewhat simplified example perhaps, but not as simplified as you think. You now understand the essence of modern banking. It is the greatest get-rich-quick scheme ever invented. If you wondered how Planet Earth's handful of elite banking dynasties became richer and more powerful than nations, well that's the scam at the core of it. But it gets worse. The early bankers, the Goldsmiths, did not always get away with it. From time to time too many people would turn up at the Goldsmith's stall with promissory notes demanding gold. If the promissory notes being waved under his nose amounted to more than the amount of gold he actually had in his vaults he was faced with promises he could not keep. The term "bankrupt" comes from Italy where the bench or "bank" from whence the failed fraudster had plied his tried would be broken up - probably by angry customers using the goldsmith's head as a hammer. Just as the practice of lending non-existent money has a modern polite name fractional reserve lending - so situations where money lenders were caught out has a polite name too: a run on the bank. Either way it amounts to the same thing: fraud, deception and promises that cannot be kept. There was however a way out for the goldsmith. While he might receive demands for £100 of gold where he only actually had £20 in his vaults, he had issued promissory notes as loans to many debtors: he could save his own hide by contacting his borrowers and calling in their loans, demanding they be repaid in gold - where no gold had been lent in the first place! In other words, the dishonest promises he had made to pay on demand gold that did not exist were backed up by larger amounts owed to him by debtors, based on loans he had made of gold that did not exist. And if his debtor could not come up with the money? This was no problem where loans were secured against the borrower's property. The property could be seized by the goldsmith and sold off to raise the gold he owed to his own creditors. Thus a - 48 -


The Worm in the Apple by Stephen Cook sinking goldsmith could drag a lot of innocent people, who had acted in good faith, down with him, or survive by dumping poverty and hardship on someone else. In fact the goldsmiths sometimes foreclosed on a debt even when they did not need to in order to acquire property worth more than the original debt. As the goldsmiths got richer and more influential they would buy and operate from business premises. Swanky business premises and nice clothes gave them an air of respectability. What more respectable a profession could there be than banking? Another point to bear in mind: fractional reserve lending enables a banker to lend out ten times what he has on deposit. Thus, where ten borrowers are loaned the same money and each borrower is loaned the money at 8% interest, the actual interest the banker is making on that money is ten times 8%. In other words, 80%. Example: The banker has £20 on deposit. He lends that £20 to one person at 8% interest. When the loan is paid back, he receives the £20 loaned plus £1.60 in interest. If he makes that same loan to nine more people and makes interest of £1.60 each time, the total amount of interest he has made on that £20 is £16! Remember that the next time you think how nice the bank is being lending you money at interest.

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The Worm in the Apple by Stephen Cook

USURY

In the Middle Ages the law of the Catholic Church forbade the practice of charging interest on loans. The charging of interest on money - making a profit without actually doing any useful work - was not considered virtuous. Secular law tended to reflect church law, so it was common for the charging of interest on money to be regarded as a crime known as Usury. As commerce grew and with it opportunities for investment, particularly in the late Middle Ages, the restrictions were eased somewhat as it became recognized that the practice of lending did involve a risk for the lender and, while his money was out on loan, lost opportunity. In recognition that a genuine service could be performed by the practice of lending, some charges were allowed but not interest as such. However, there is a vast difference between charging someone for the temporary use of one's own money and charging interest for the use of false promissory notes purporting to represent something that does not exist! And in the latter case there is neither risk for the lender nor lost opportunity. None other than Sir Josiah Stamp, Governor of the Bank of England during World War Two, summed up the morality of the fraud thus: "Banking was conceived in iniquity and born in sin. Bankers own the earth, take it away from them but leave them with the power to create credit; and, with a flick of the pen, they will create enough money to buy it back again. Take this power away from them and all great fortunes like mine will disappear, and they ought to disappear, for then the world would be a happier and better world to live in. But if you want to be slaves of the bankers and pay the cost of your own slavery, then let the bankers control money and control credit."

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The Worm in the Apple by Stephen Cook

PROFIT BY THE MISFORTUNE OF OTHERS

The money lenders/early bankers soon discovered that even more profits could be made by manipulating a nation's economy. This was done by periodically tightening up on money supplied to the economy through lending; then making money easy to borrow and thus plentiful; then tightening up on it again. You have already seen how the practice known as fractional reserve lending (FRL) enabled the bankers to greatly increase the amount of money in circulation simply by creating it out of thin air. Money thus created and loaned into existence soon became a major component of the total money supply. In fact its proportion has gone on increasing to a point where today it comprises a staggering 97% of all the money in circulation. Hard currency the notes and coins issued by the government and spent (not loaned) into the economy - is now a meager 3%. But even in earlier times, debt-money created by the bankers was significant enough in volume to affect the entire economy. The bankers evolved a scam that works like this: when they made money easy to acquire by offering cheap loans, money was plentiful and economic activity picked up. Businesses expanded. More money was then needed to match the increased production and as loans were cheap and "consumer confidence" high, people could be seduced into taking out more loans. The bankers would then tighten the money supply by making money (loans) more difficult and expensive to get. What would happen then, is by and large what happens today when the money supply is tightened: increased repayments on past borrowing reduced disposable incomes - the amount of money people have available to spend on goods and services. This hits industry's ability to sell its goods and prices drop. Industry also has increased interest payments to contend with so between its own increased interest payments and falling prices, profits are hit. Wages go down and/or businesses go bust. People are thrown out of work so they no longer are earning wages they can spend on industry's goods and services but they still have to pay off their own loans, taken out in better times. So people find the property against which the loan was secured is repossessed. As less money is being issued into the economy by lending and more money is being removed from it by increased repayments there is a shortage of money created throughout the economy. But as the banks have tightened up on lending new money into existence, the shortfall is not replenished. The shortage of money continues until - and not before - the bankers decide to allow more money into the economy by - 51 -


The Worm in the Apple by Stephen Cook making borrowing easier. It's called a depression. Depressions happen because those who control the money supply make them happen. When the banks tighten the money supply in this way, a certain percentage of people will not be able to meet their loan repayments or borrow more money in order to reschedule loans they can no longer handle. People go bankrupt and to settle their debts, have to surrender the assets, property or land against which the debt was secured to the money lenders, usually at much less than their market value. And those who survive flow more money into bank coffers through increased interest payments. That's the scam. It worked when the money lenders dreamed it up four hundred years ago and it still works today with the use of changing interest rates. Ease off on the money supply and create a boom, seduce lots of people into borrowing, then tighten up on the money supply knowing that a certain percentage of people will go bust. As each boom and bust cycle unfolds the money lenders cream off a slice of the nation's wealth. These boom and bust cycles - given the technical sounding name of the Business Cycle - have been engineered for so long many people assume they are natural phenomena. The truth is they are engineered.

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The Worm in the Apple by Stephen Cook

THE ENGLISH CIVIL WAR

Although religious differences fueled the civil war, the bankers certainly played a central role in that they financed Cromwell's successful efforts to overthrow the King in 1649. Cromwell had been able to raise The New Model Army with which to defeat King Charles I. This army was a modern fighting force, splendidly equipped and trained and highly professional, financed by money loaned by the financiers of the day. The bankers were then given favorable treatment and enabled to consolidate their own power by a government whose victory they had financed. For the next fifty years, the country was plunged into a series of wars that were costly for the country but highly profitable for those who loaned the money to finance them. The Monarchy was re-established in 1660 after Cromwell's death and the royal line of the Stuart Kings was restored.

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The Worm in the Apple by Stephen Cook

AND LO! A CENTRAL BANK WAS BORN!

Conflict between the bankers and the Stuarts led the bankers to act in concert with bankers in Europe. They joined forces with those in the Netherlands to finance the invasion of England by William of Orange, grandson of the deposed Charles I via Charles' daughter Mary. William overthrew the Stuart Kings in 1688 and became King William III. By the end of the 1600s England was in financial ruin; gold and silver supplies were running low and a costly civil war followed by costly wars with France and Holland all in a fifty year period had left her up to her eyeballs in debt. Government officials met with the financiers to negotiate the loans they needed to pursue their political goals. King William, financed by the bankers six years earlier when he invaded England and took the throne, was ÂŁ20 million in debt and could not pay his army. Apparently it did not occur to William or anyone that if William needed to pay his army or get the economy going, all he had to do was have the government print its own money and use that to pay the troops! King Henry had done a similar thing using Talley Sticks six hundred years earlier and they were still going strong. All they had to do was get busy polishing up a few more lengths of wood! But William was a soldier, who once he had finished invading England, had gotten busy beating up the Irish, and what he needed was a quick fix, one that did not involve too much thinking. He was not a native in any case; and perhaps he was not too concerned about the future consequences to the English nation of the solution he and his financial backers came up with. His "friends" the bankers were willing to loan him the money he needed but the price they wanted for their "help" was high. They wanted a government-sanctioned but privately owned central bank that could, through fractional reserve lending, create money out of nothing and loan it to the government. They got their way. In 1694 the world's first privately owned central bank was created. It was to be called the Bank of England. The Bank's charter included the following immortal words: "The bank hath benefit of the interest on all monies which it creates out of nothing." Instead of exercising its right to create money and spend it into the economy, the government had the bank create it, then lend it to the government so that the government could spend it into the economy, then pay the loans back later at - 54 -


The Worm in the Apple by Stephen Cook interest. That needless complication was to have devastating consequences for the future of the English people. As well as delivering extraordinary power over the nation into the hands of a private profit-motivated corporation, it began the National Debt; a debt that would go on increasing remorselessly over the ensuing years until, in the present day it has reached over £380 billion, costs £30 billion a year in interest payments and is still climbing. By that time, the end of the 17th century, the role of the banks in issuing the nation's supply of money had become widely accepted. Money was borrowed into the economy by two routes: private and commercial borrowing on the one hand and government borrowing on the other. The combined debt in the present day is now well over one trillion pounds. In 1704, just ten years after the creation of the Bank of England and two years into the reign of Queen Anne, William III's successor, the banks' promissory notes, on the recommendation of the bankers and financiers who advised the government, were declared legal tender. It is worth reflecting on the name of the new bank. Although it was an entirely privately owned corporation, the name chosen for it led generations of Englishmen to believe that it was part of their government, when it most certainly was not. Like any other privately owned corporation it sold shares to create its initial capital. Its investors - whose identities were never disclosed and may easily have been foreign financiers with no loyalty to or concern for the nation whose economy the bank was to dominate and manipulate over the ensuing centuries - were supposed to put up a total of £1¼ million in gold coin to purchase their shares. Only £¾ million were ever received. Nevertheless the bank was chartered in 1694 despite that minor technicality and started out on the business of lending out several times the money it supposedly had in its reserves. In exchange for this unique and immensely profitable risk-free privilege, the bank would very kindly lend the English, and later British, government as much money as it wanted, at interest, provided the debt was secured by direct taxation of the people. This Bank of England caper amounted to legalization of the counterfeiting of a national currency for private gain and at the cost to that nation that would prove to be completely un-repayable and go on mounting year after year to truly astronomical proportions. Why does a national debt escalate? To get at the basic mechanics, let us strip away the camouflage net of complexity that hides it from view and take a simplified model so as to illustrate the point.

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The Worm in the Apple by Stephen Cook

NATIONAL DEBT

Suppose a national economy can jog along just nicely with £10 million in circulation. That £10 million is just about the right level of money supply to enable exchange to occur freely between producer and consumer, without the over-supply of money called inflation or money shortages known as recession. Suppose there is an increase of economic activity due to more goods coming onto the market, the opening up of trade routes, population growth or some such cause. The economy now needs £11 million pounds to be able to function smoothly. Instead of creating the money, the government borrows the extra £1 million from the bank at (say) ten per cent interest. The added supply of money enables the economy to function smoothly. But what happens when the debt comes due for repayment? The government repays the £1 million to the bank plus £100,000 interest and settles the debt. But that leaves only £9.9 million in the economy, less than it started with and now £1.1 million less than it currently needs. So the government borrows the £1.1 million now needed by the economy from the bank at 10% interest. The economy now has £11 million again. But the debt has to be repaid and when it is the government has to remove £1.1 million plus £0.11 million interest from the economy to pay it off. The economy is now £1.21 million short of what it needs. So the government borrows £1.21 million to cover the shortfall and when it pays of that loan plus interest, the economy is now short of £1.331. So the government borrows that..... And so on. As this continues, the level of debt grows in proportion to the total money supply. At each stage to pay it off and not replace the money taken out of circulation by so doing, leaves the economy short of the money it needs to be able to function properly. The amount of money that has to be borrowed just to sustain the money supply at a certain level always increases. It quickly becomes impossible to get out of debt. But the borrowed money is soon spent and circulates in the economy. It is now, along with the rest of the money supply, in people's pockets or bank accounts. How does the government remove from the economy the money it must pay back to the bank? The obvious answer to that is: taxation. By taxing the population the government raises the money it needs to pay off its debts. But the government will already have been raising taxes from its people to pay for the various services it provides: health care, education, roads, defense and so on. The burden of repaying the national debt is added to that existing tax burden and as the debt escalates, it creates an upwards pressure on taxation levels. Those taxes are being levied on a population already burdened by their own debts. As you will see later, Government borrowing is one route by which the money supply - 56 -


The Worm in the Apple by Stephen Cook is maintained or increased, the other route is businesses and individuals borrowing from banks. Where money is supplied to the economy by borrowing from banks, then borrowing must occur, either by the government or by the population. If there is no borrowing there is no money supply. In much the same way as governments go deeper and deeper into debt in order to maintain or increase the money supply, then so amongst the population, the debt tends to increase. If government does not borrow then the population has to; if government shoulders a greater burden for borrowing money into the economy, then the pressure on the population to borrow tends to decrease. Either way an economy becomes riddled with debt - and either way the population is paying for it, either through taxes or through direct debt repayment. Let's now take a closer look at how this government borrowing occurs and what it really means.

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The Worm in the Apple by Stephen Cook GOVERNMENT BORROWING - SIMPLE FUNDAMENTALS

The government prints up bonds, which are merely glorified IOUs; they are promises to pay certain amounts of money at a future date plus interest. These IOUs are then sold to the central bank for whatever value is printed on them (say, £1000). The money the bank uses to buy them is money created out of nothing by the fractional reserve borrowing trick discussed earlier. That money is then used by the government to finance whatever government projects it wishes to finance: building roads, public works, poor relief, or knocking the stuffing out of its neighbours and so on. When the IOU matures, the government has to pay back the £1000 plus interest. The rest you know. It probably has not escaped your notice that if the government can draw up a bond, write the number £1000 on it and sell it to a bank, spend the proceeds from the sale on whatever it requires to spend the money on then later pay back the £1000 plus an amount of interest it has to raise from taxation, it could just as easily draw up a note, write £1000 on it and spend it into the economy. In fact, it could do this far more easily. The £1000 would remain circulating in the economy, free of debt and the population would be saved the extra tax burden of paying interest to a bank that conjured the money out of thin air in the first place. What the whole scam amounts to is a tax or rental charge paid by the people for the privilege of using their own means of exchange! But the tax benefits not the government, which could have used the revenue to provide services, but a private corporation. It also establishes that private corporation as an extra layer of - hidden - government; a senior echelon above whatever government people believe is calling the shots. The criminality of the system has remained difficult even for political leaders to see, partly because it is so fraudulent and so crass nobody can quite believe anyone would be that devious, or stupid; partly because of its breathtaking audacity; and partly because, as I’ve mentioned, it is obscured by a smokescreen of complexity and economic gobbledygook. When is the last time you listened to a politician or "expert" explaining why we can't pay nurses a decent wage or our coal industry has to be shut down so we can import coal from Poland and wound up knowing what the hell he had been talking about? And if you couldn't follow what was being said, you assumed it was you didn't you? Economics is just too complex for the likes of us; better leave it to the experts! Well, if the experts are so expert, how come our nations are in such a mess? Everyone assumes there must be some sense or purpose to it all, some underlying economic logic because, if not, surely respectable bankers and capable politicians would not be party to it. Unfortunately there isn't and they are. All it is, is a criminal fraud pure and simple. - 58 -


The Worm in the Apple by Stephen Cook

BOOM, BUST AND WAR

With the formation of the Bank of England and the government embarked upon racking up an un-repayable and completely unnecessary debt, England was soon awash with money. Don't forget that the country's other banks were still hard at it, lending counterfeit money to private individuals and businesses. Loans were being granted for any wild or hare-brained scheme. By 1698 government debt alone had grown to ÂŁ16 million in just four years and taxes were increased, then increased again, to pay for all the borrowing. Private individuals and businesses meanwhile were also falling deeper into debt. And what did the bankers do once all and sundry had been seduced into borrowing? You guessed it! The banks tightened the money supply, called in loans and demanded higher interest payments, reducing the amount of money in circulation below a level the economy needed to function properly and keep growing. Contraction of the money supply contracted economic activity, throwing the country into depression. In fact the economy began to experience endless rounds of booms and depressions - the very phenomena central banks claim to prevent. England's money and its economy have rarely been stable since the creation of the Bank of England. And with every depression came bankruptcies, lay-offs, closures and repossessions of property and land. It is worth reflecting that the country could (and still can) swing very rapidly from boom to depression. One minute it is highly productive, its economy just whizzing along and the next, "clunk!" depression. Suddenly people no longer wanted to buy shoes, potatoes, wines, pots and pans, roof tiles or the Sunday roast the way they did just weeks or even days before. Apparently there was a "drop in demand," as if everyone has suddenly gone off the idea of having the necessities and perks of life. So prices went down, profits were hit and all the rest. But what really had changed between boom and depression? People had not changed; the farms, fields and factories and their capacity to produce had not changed; people's needs and wants had not changed. What had changed was the money supply. Suddenly the consumer no longer had sufficient spending power with which to express his demand. Depressions were particularly cruel in earlier times: people went to prison for unpaid debts, even where the debts had suddenly been rendered un-repayable by a hike in interest rates that was no doing of their own. - 59 -


The Worm in the Apple by Stephen Cook

The impact of a depression was absolutely devastating to the poor and agriculture was particularly badly hit then as now because loans were raised against land and the productive cycle of farming - the time between tilling and sowing and the harvest and sale of finished goods where money could be recouped - is a long one. In 1705 things had gotten so dire that John Law called for a commission to be appointed by Parliament with the task of creating and lending paper money on the security of land ownership. Land could not be taken abroad like gold or silver, which were under the control of the money lenders, and thus deprive the nation of the reserves against which it raised money. His proposal was to create a regulated steady flow of money into the economy out of the hands of the money lenders and thus avoid the wild and devastating fluctuations the nation was experiencing. By the mid 1700s Britain was nearing the zenith of her world power but since the creation of the Bank of England had found herself embroiled in a further series (four) of costly European wars in just fifty years. Government debt had reached ÂŁ140 million, a truly staggering debt that colonization of half the planet had not managed to alleviate in the slightest. It was a desperate government's attempts to raise revenue by taxing the American colonies that eventually sparked the American War of Independence, of which more later in this book. In 1746, Bishop Berkley had this scathing criticism of the financial system and the economic instability that derived from it. He asked: "Whether the quantities of beef, butter, wool and leather exported from these islands can be reckoned the superfluities of a country, where there are so many natives naked and famished? Whether we are not in fact the only people that may be said to starve in the midst of plenty? Whether it be not a mighty privilege for a private person to be able to create a hundred pounds with the dash of his pen?" In 1793, King Edward wrote: "The issuing out of any notes for general circulation ought to be as sacred to a government....as the issuing out of gold and silver coin is sacred to a government and to the mint at the Tower." In 1797 England faced yet another war with France. Much of England's gold and silver had found its way abroad and the shortage caused a crisis. With so little gold and silver around, the banks themselves were completely insolvent (I refer you to the section on Goldsmiths earlier). Of course, they had in reality always been insolvent by virtue of issuing promissory notes against reserves they did not have but by that year the banks' lending of paper notes vastly exceeded meager gold and silver reserves. Between 1794 and 1796, Bank of England gold reserves "fell" from ÂŁ7 million to ÂŁ1 - 60 -


The Worm in the Apple by Stephen Cook million. The major banks began to restrict their lending sharply but this precipitated further economic slow-down and warned depositors that a crisis was afoot. It caused people to rush to exchange their money for gold and an all out run on the banks seemed immanent. This had happened now and again in the past but this time it was threatening to happen just when England was poised for war with the other global power o the time: France, which was embarrassing as well as inconvenient. The remaining gold stocks had to be protected at all costs because they would be needed for waging a major war in Europe and English notes could not be spent abroad because they were generally not trusted. In 1797, for the first time in England's history, the exchange of notes for gold was officially prohibited, a restriction that was to last until 1815. This deprived depositors of access to gold that was strictly speaking their property and left it in the hands of the bankers to do with as they wished. It did not make anyone feel any better about it knowing their gold was going to be put to work killing their French neighbors. The currency was now only based upon bank lending. Banks regulated their lending much as they do today, but balancing the paper money loaned to borrowers against re-deposited paper money. Government debt had stood at ÂŁ16 million in 1698, a century later it had soared to ÂŁ300 million and then over the ensuing years had taken off like a rocket, reaching a staggering ÂŁ773 million in 1815 as the government had borrowed feverishly to finance its simultaneous wars with Napoleon and the United States. The war with Napoleon ended at Waterloo in 1815 and it is here that a character called Nathan Rothschild enters the scene with a breathtaking scam that luridly illustrates the power and willingness of the international money lenders to fleece entire nations.

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The Worm in the Apple by Stephen Cook

THE DAWN OF THE AGE OF THE ROTHSCHILDS

In 1743, forty nine years after the Bank of England opened for business, a goldsmith by the name of Amschel Moses Bauer opened a coin shop or counting house in Frankfurt, Germany. Over the door he hung a sign depicting a Roman eagle over a red shield. The shop became known as the Red Shield (Roth-schild) shop. When Bauer's son - also called Amschel - inherited the family business, he decided to change his name to Rothschild. Amschel Rothschild soon learned that lending money to governments and kings was more profitable by far than lending it to lesser mortals. The loans were bigger and what's more could be secured against the nation's taxes. In other words they had as security the labor of entire peoples. Rothschild had five sons, all of whom he trained in the black arts of lending insincere promissory notes and how to use the resultant profits to best effect. He sent them out to the major capitals of Europe to further the family banking business. His oldest son, also called Amschel, remained in Frankfurt; Solomon went to Vienna, Nathan (the cleverest) to London in 1798 at the age of 21; Karl to Naples and Jacob to Paris. In 1785 Rothschild senior had moved his entire family to a large five-storey house they were to share with another banking family, the Schiffs. The Rothschilds and Schiffs would for the next two hundred years, right up to the present day, figure prominently in Europe's, America's and indeed the world's banking history. The Rothschilds broke into big-time dealings with royalty at Williamshalt, the palace of Prince William of Hesse-Hessel. Prince William at that time was the richest man in Germany and probably in all of Europe. When the business relationship began, the Rothschilds were merely helping William speculate in precious coins but when Napoleon invaded the principality and forced the prince into exile, William sent ÂŁ550,000 (an enormous sum in those days) to Nathan Rothschild in London, with instructions for him to buy British government bonds with it. Nathan had bigger and better ideas and without his client's knowledge he used the money for his own purposes. With Napoleon on the rampage and all of Europe embroiled in costly war, Nathan knew that the opportunities for investment, so far as the unscrupulous were concerned, were enormous. War had always been the most profitable scenario for the money lenders with governments on both sides desperate to borrow funds to finance their war efforts. In 1815, just prior to the battle of Waterloo that finally ended Napoleon's career, Prince William had returned to Williamshalt, then summoned the Rothschilds and asked for his investment back. The Rothschilds were able to return his money along - 62 -


The Worm in the Apple by Stephen Cook with the interest he would have made had it been used as instructed to buy British government bonds. They kept for themselves the vastly greater profits they had made using their unsuspecting client's money. Nathan Rothschild later boasted that in the seventeen years he had been in England, he had multiplied the original stake of ÂŁ20,000 given to him by his father by 2500 times! However much of a killing Nathan had made using Prince William's money, it was nothing to the killing he was soon to make on the London stock market a day or two after Napoleon's defeat at Waterloo.

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The Worm in the Apple by Stephen Cook

NAPOLEON

Napoleon, as a matter of interest, was not entirely happy with the bankers either. The Bank of France was established in Paris in 1800, by amazing coincidence just after the anarchy that toppled the country's monarchy and aristocracy and installed in power the merchant/entrepreneurial classes. It was set up along the same lines as the Bank of England. However, Napoleon was uneasy about his country's reliance upon international bankers to create its money, believing that when such reliance exists, the bankers are in control: "The hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain." In 1803 Napoleon struck a deal with Thomas Jefferson, the incumbent third President of a United States that had only become independent of England twenty years earlier. For $3 million in gold, the United States purchased from France a large chunk of French territory west of the Mississippi river - a deal which became known as the “Louisiana Purchase.� Napoleon used the money to raise an army without the need to borrow from the international financiers he so mistrusted. He set off across Europe generally having a whale of a time attempting to inflict on everyone else, at gunpoint, his own version of the Roman Empire, which just goes to show that a mistrust of the banking system does not of itself mean that one is a balanced and well-rounded human being. The equally balanced and well rounded human beings that dictated the policy of the Bank of England mobilized to oppose the little Corsican, heroically lending vast sums of money to every nation in his path in order to defend civilization-as-we-know-it and in so doing, naturally, reaping the vast profits that were to be made from nations at war. Prussia, Russia and Austria all plunged heavily into debt in failed attempts to defend themselves against Napoleon's advance. Four years later, with Napoleon's main army in Russia, Nathan Rothschild masterminded a plan to smuggle a gold shipment through France to the Duke of Wellington in Spain. The adventure succeeded, providing much needed funds that enabled Wellington to successfully attack Napoleon's empire from Spain. Shortly thereafter, at a dinner party in London, Nathan boasted that it was the best business he had ever done. But that was 1808. Waterloo was still seven years in the future. Nathan Rothschild was destined to do much better still. - 64 -


The Worm in the Apple by Stephen Cook Wellington's attacks from the South and other defeats by an alliance of England, Austria, Prussia and Russia eventually forced Napoleon to abdicate in April 1814 and he was exiled to the island of Elba while Loius XVII was crowned King of France. In March 1815, Napoleon escaped from exile on Elba and returned to France. The King sent a troop of soldiers to arrest him but such was Napoleon's popularity that that the soldiers rallied around him and proclaimed him their emperor once more. Napoleon regained power and held it for one hundred days, long enough to raise an army and throw it into battle against an alliance of England and Prussia at Waterloo, which is now in Belgium. Some writers claim that Napoleon borrowed ÂŁ5 million from the Bank of England to finance his come-back and others that it came from a banking house in Paris. Perhaps it does not much matter: no-one knows the identity of the financiers who owned the Bank of England and it is entirely possible that both banks were owned or controlled by the same men, or the same clique. Certainly from around that time it became common for the same bank to fund both sides in a war. War is the biggest debt-producer there is. The ultimate loser of a war can be loaned just enough to keep him going in the hope of victory while the winner is loaned enough to win. That way the outcome can, up to a point, be controlled whilst huge profits are made from both sides. Such loans are usually given on the guarantee that the victor will pick up the debts of the vanquished. Be that as it may, Napoleon got his funding, raised his army and met Wellington's army at Waterloo. History records that he was defeated, abdicated again and was exiled to St Helena where he died. However, while the battle was still raging, the outcome was by no means certain and quite possibly if Napoleon had attacked Wellington's army a few hours sooner, he might have won. But that's life. In London, Nathan Rothschild had worked out how to seize control of the London stock market and probably even the Bank of England, no matter which side won. All he had to do was make sure he knew the outcome of the battle before anyone else did. If people believed England had won, the stock market would rise. If people believed England had lost, the market would crash. All he had to do was make them believe the opposite of what was true. So Nathan had the foresight to station a trusted agent on the north side of the Waterloo battlefield - a man named Rosworth. As soon as the watching Rosworth could see that Wellington had won the day, he raced back to London and arrived there a full day ahead of Wellington's own couriers. Rosworth reported straight to Rothschild with the result of the battle. Rothschild rushed to the stock market and took up his usual position in front of an ancient pillar. Rothschild was a familiar figure, having been in England as head of the London branch of the Rothschild empire for seventeen years by then. The Rothschilds had a legendary intelligence network that crisscrossed Europe and everyone present that day watched Rothschild nervously for some indication that he had already received - 65 -


The Worm in the Apple by Stephen Cook news of the battle. If England had lost and Napoleon was dominant in Europe again, the country's financial and trade position would be dire, particularly as during his earlier reign Napoleon had imposed a ban on British goods throughout his vast empire, its allies and dependent states. Standing in front of his pillar, aware that all eyes were upon him, Rothschild contrived to look downcast. He then began selling. Everyone knew what that meant: England had lost. A panic ensued in which people scrambled to sell their British Government bonds. The bonds as you will recall, were the IOUs the government sold to raise money, buying them back at interest when they matured. To buy a government bond was usually a sound investment but if the nation was in serious trouble, with the possibility of another Napoleonic trade embargo or even another invasion attempt like the one Nelson had thwarted at Trafalgar ten years earlier, the government might be in no position to honour its bonds. The bonds might end up not worth the paper they were written on so anyone who owned government bonds wanted to cut his losses and sell them for whatever price he could get for them - which wasn't much that day, as their price plummeted. As the market value of the bonds hit rock bottom, Nathan Rothschild began secretly buying them up, at a fraction of their actual worth. When news finally reached London the next day that Wellington had in fact won, the value of the bonds was restored and Rothschild found himself the proud owner of millions of pounds worth of government IOUs, purchased at bargain basement prices. As long as a hundred years later, Nathan Rothschild's grandson tried to suppress through the courts the publication of a book containing the story of the stock market killing. He lost the case.

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The Worm in the Apple by Stephen Cook

THE ROTHSCHILD EMPIRE

Within 24 hours the Rothschilds had come to dominate not only the bonds market but, many authors claim, the Bank of England as well. It is difficult to know the truth when the ownership and dealings of the Bank of England, the richest central bank in the world, are to this very day cloaked in such secrecy that even MPs are not allowed to ask questions about it in the House of Commons. One thing is for certain though: the Rothschild family is the richest family in the world bar none. With branches of the family planted in Europe's major cities and by cooperating within the family and through alliances with other banking families such as the Schiffs they had by the mid 1800s come to dominate all European banking. They were able to use their vast wealth to assist the expansion of friends and allies. They financed Cecil Rhodes and made it possible for him to establish control over the diamond and gold fields of South Africa. In the USA they financed the Harrimans (railroads), Vanderbilts (railroads and the press), Carnegie (the steel industry), the Rockefellers (oil), JP Morgan's diverse banking and industrial empire and many others. They dominated the government bond market and had branched into other banks and diverse industrial concerns. The latter half of the nineteenth century was known as the Age of the Rothschilds. Despite this overwhelming wealth, the family has always been careful to avoid the limelight. Although they control scores of industrial, financial, mining, tourist and commercial corporations, only very few bear the Rothschild name. By the end of the last century, one expert had calculated that the Rothschilds actually controlled the wealth of the entire world. Whether that is an exaggeration or not one cannot be sure but if they do not control it all, it is certain that in the hundred years since that claim was made, with the banking scam operating unchecked across the entire planet and entire peoples being bled dry because of it, they do control a heck of a lot of it.

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The Worm in the Apple by Stephen Cook

ENGLAND AFTER WATERLOO

During the 119 years between the founding of the Bank of England and the defeat of Napoleon at Waterloo, England had been at war a total of 56 years and had been preparing for war for most of the rest. Government debt had soared to £300 million in 1797, and then soared even more majestically to a stratospheric £773 million in 1815. In that same period, the number of provincial banks had risen from 80 in 1797 to over 700 by 1810. These banks issued their own notes, and had taken to using Bank of England notes, instead of gold, as their fractional reserves. In other words, instead of issuing notes that pretended to represent gold, the banks were now issuing notes that pretended to represent notes that pretended to represent figures in accounting ledgers! In 1815, after Waterloo, the banks started calling in their loans and restricted further lending. Yet again the money stock collapsed as money was withdrawn from circulation. The total of money in circulation plummeted from £48 million in 1814 to £34 million in 1816 to £16 million in 1822. As most of the money in circulation in 1816 had been paper money loaned out by the banks, the entire country was riddled with private, commercial and government debt and taxes were high. Yet again the country was deliberately shoved into a depression with the usual widespread hardship, increasing poverty, business failures and bank repossessions. Prices fell by 20% between 1814 and 1816 and 60% by 1820!

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The Worm in the Apple by Stephen Cook

MORE BOOM AND BUST

Merchants, farmers and other producers of the nation's wealth, who had borrowed money to a degree manageable when their products sold for 1814 prices, now had severe problems meeting debt repayments when the same goods sold for 60% less by 1822. Agriculture was extremely hard hit and many farms and estates went bankrupt. One should bear in mind that throughout these dreadful years of hardship, when unemployed farm laborers rummaged in the hedgerows for food to feed their children next to fields full of crops that went unsold for want of sufficient money with which to buy them (money that could have been created by a stroke of the pen), the bankers did absolutely nothing to help their fellow men. They were perfectly happy to stand by and watch the victims of their caper starve. They could have eased off on their demands for loan repayments or even written off loans altogether. Why? Because the loans were nothing but pieces of paper conjured out of thin air. No real wealth had been loaned and nothing but numbers in a ledger would have been lost if loans had been forgiven. The callousness displayed by the men masterminding the scam simply beggars belief and represents the destruction of people on a scale of which Joseph Stalin would have been proud. Real wealth on the other hand was been accrued at a rapid rate by the bankers through the mechanism of repossession. Not only were the bankers happy to sit and watch millions of people have their lives ruined, they were happy to cause that ruin. In the midst of a well equipped and physically productive economy with fleets of trading ships in the harbors, fields full of crops, mills and workshops operating well below capacity, the grinding poverty, on a scale England had never before seen, was an artificial poverty, a money poverty that contradicted the physical facts. In the "Political Register" in 1830, William Cobbett observed: "The Bank....has plunged agriculture and trade and rents and debts and credits all into confusion." By 1790 forgery had become widespread and peaked after the Napoleonic Wars. People were hanged or deported for even possessing a forged bank note. The realization that the Bank of England had with impunity been doing much the same thing - counterfeiting gold - for over a century, and the banks in general for a lot longer than that, caused an outcry. The political commentator Wooler wrote in an article entitled: "The Black Dwarf": - 69 -


The Worm in the Apple by Stephen Cook "The Old Hag of Threadneedle Street [the Bank of England] must have no repose, until she consents to abandon her infernal traffic in the blood of those who are tempted to imitate her ragged wealth." In fact, the Bank of England became involved in decisions as to whether or not clemency should be granted to convicted forgers. William Cobbett, writing in 1819, did not mince his words: "This villainous bank has slaughtered more people than would people a state. With rope, the prison, the hulk and the transport ship, this bank has destroyed perhaps 50,000 persons, including the widows and orphans of its victims. At the shop of this crew of fraudulent insolvents, there sits a council to determine which of their victims shall live and which shall swing! Having usurped the royal prerogative of coining and issuing money, it is but another step to usurp that of pardoning or causing to be hanged." Unrest among the population was widespread. In Ely in 1816 there were riots in which starving farm laborers demanded "bread or blood!" Much of the public anger focused upon the banking system itself. During a protest in Birmingham a spokesman, Thomas Attwood, declared that the financial collapse had caused: "The secret and unjust transfer of the prosperity of the debtors into the hands of their creditors, and the far more ruinous transfer of the productive powers of the nation from hands accustomed and competent to do them justice into other hands totally incompetent to guide them at all." In 1816 and 1817 the government increased its borrowing from the Bank of England in order to try to alleviate the money shortage. It borrowed ÂŁ1,750,000 to finance public works and for relief of famine. Through 1818 there was a period of short-lived relative prosperity. In 1819 there was a further contraction of bank lending plus increased repayment of government loans, which further contracted the money stock. Renewed and even more acute economic hardship resulted. Prices plummeted to 60% of their previous levels by 1922. There was a renewed wave of repossessions, especially of farms and estates and much of this wealth passed into the hands of the large banking families as wealth must inevitably do in a debt economy where bankers can crash the economy simply by squeezing credit when it suits them. Modern farmers, suffering like their forebears under the combined weight of debt and an unwillingness on the part of a government riddled with the proxies of banking interests to come to their aid, will recognize the phenomenon as the nation gradually surrenders to faceless financiers control over the land that feeds it.

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The Worm in the Apple by Stephen Cook When a small clique of men seizes control of a nation's food supply, there indeed is totalitarian power. And where a government does nothing to prevent it, there indeed is betrayal. In 1819 an Act was passed, which committed the government to a return to the Gold Standard, which it did in 1822. It achieved nothing except to place more power into the hands of those who monopolized control over that scarce commodity. In 1822, the idea having by then been established that a government should borrow to solve peacetime economic problems caused by borrowing as well as borrowing to fight a war, the government duly cranked up the National Debt by borrowing a further £4 million. The purpose was to alleviate agricultural problems. It didn't. The economic collapse and the population's attendant distress continued through 1823. By 1825, another round of government borrowing inflated the economy and the government spent this borrowed money into the economy, conditions began to ease. The money stock now stood at £25 million, £9 million less than it had been in 1815, while the National Debt, at over £773 million, was some thirty times the size of the total money stock! The Bank of England, having suddenly reversed its policy, undertook massive lending on a scale staggering for the time and in just two weeks almost doubled its lending from around £8 million to just under £15 million. But this was, of course, more borrowing and money borrowed today has to be paid back with interest tomorrow so between 1829 and 1833 there was another round of general economic distress and business failures and, once again, agriculture was particularly hard hit. Later that century research was undertaken that had never been done before: to establish how living standards in England had changed. And everyone received something of a shock.

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The Worm in the Apple by Stephen Cook

SINKING BRITANNIA

The research showed that in 1495 the wages of an agricultural worker enabled him to buy a year's supply of the food needed to feed his family with just 15 weeks of work. By 1564 the work required to buy a year's supply of the same food for the same family had risen to 43 weeks. By 1684 the entire year's wages of that same worker would not buy the same food for the same family. By 1725 that same worker's year's wages would only buy 80-85% of the provisions. By 1777 the purchasing power of wages had fallen over that period by a factor of three to four. In 300 years the nation's living standards had plummeted despite the country's burgeoning sea trade, its unsurpassed world standing and its conquest of an empire that incorporated the untapped wealth of entire continents! While England was sinking into bankruptcy and penury, whilst its young men were dying half across the globe to secure an empire that made no difference to plummeting living standards at home, Nathan Rothschild, from the comfort of his London offices, was amassing a fortune of £50 million, by buying up British government bonds and, in concert with his brothers, the bonds of other European governments. His fortune, you will notice, was twice the size of Great Britain's total money stock. By then, the government had taken to relying on him to obtain gold supplies from abroad to make up for the recurrent shortages of gold at home. It was hardly surprising they bought gold from him considering he and his fellow money changers controlled much of the world's supply and it was hardly surprising the government needed it too, being as the country had been put back on the Gold Standard. Does anyone smell a rat here, or is it just me? The banking elite, of which Nathan Rothschild was but one player, had amassed such wealth they were able to use their money to influence the destinies of entire nations. In 1820 and 1824, for instance, £2 million and £4¾ million were loaned to the rebels of Columbia fighting against Spanish rule. Major British bankers "invested" just under £3 million in Dom Pedro's attempt to seize the Portuguese throne; they made loans to Argentina, Prussia, Spain, Naples, Guatemala, Russia, Mexico and Denmark and lent £15 million to America. - 72 -


The Worm in the Apple by Stephen Cook Such was the philanthropy of British financiers that in the first 25 years of the nineteenth century a staggering ÂŁ100 million was loaned abroad. And that was happening whilst money was being squeezed out of the economy at home! Back home, as the regular and terrible depressions sprang from causes the public could not see, it was then easy to blame them on government policies, greedy industrialists, recalcitrant labor unions, the nation "living beyond its means", "overproduction" (when half the country is starving and clothed in rags!), foreigners, God or bad karma. Such false blame, operating as a smokescreen of confusion and falsehood, was easy to lay where the country's press was going the same way as every other industry, becoming increasingly mortgaged to the banks. A publisher, whose survival depends on continued bank credit, is hardly likely to attack those upon whom he relies for his survival. The same goes for the "science" of economics, whose learned but usually impenetrable tomes mention neither that money creation is based on a fraud nor the role of the bankers and their debt money in crashing economies. But, as the banks have invested heavily in institutions that train economists, that is hardly surprising is it?

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The Worm in the Apple by Stephen Cook

GOLD!

By the mid nineteenth century and after several more collapses, the situation was changed fortuitously by the discovery of large amounts of gold in America and Australia. For decades, the world's production of gold had been around ÂŁ3 million per year, which was totally inadequate for the world's currency needs but rather good for those who controlled the supply of that scarce commodity. But all that changed dramatically as, in the period 1848 to 1858, gold production soared to ÂŁ40 million a year, matching that of the previous four centuries. This was rather providential for many nations, in that it put more money into the system by a route the bankers could not control. Yet the resultant boom was destined to be short-lived and by 1873 more scarcity had returned as soaring production once more outstripped the money supply. In 1875, Prime Minister Gladstone said: "The state ought to get into its own hands the whole business of [money] issue and that.....course should be taken upon the first available opportunity." It is a pity no-one listened. In fact for the remainder of the century bank lending soared, alleviated by the occasional influx of gold from the American and Canadian gold rushes. The regular rounds of boom and depression - the so-called business cycle - continued through the end of the century and into the early twentieth century. With each spate of lending the country became more indebted and the debt-money component of the money supply - private, commercial and national debt - became greater and greater in proportion to the total money in circulation. The proportion of the total money stock provided on loan by the banks had increased from 40% in the eighteenth century, to 60% in the mid nineteenth and was destined to go on increasing until, in the present day it comprises 97% of the total money stock. Each cycle, in other words, increased the power of the banks to influence the economy.

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The Worm in the Apple by Stephen Cook

STARVING IN THE MIDST OF PLENTY

For the majority of the population, the Victorian age was one of poverty, squalor and hardship unparalleled in British history. On the part of many in the corridors of power there was a callous acceptance of starvation and squalor. And all this occurred throughout a period in history not of material scarcity occasioned by flood or earthquake but of historically unparalleled abundance! The agricultural and industrial revolutions had given the British new technologies with which to produce food, clothing, sanitation, housing and all the material wherewithal of living on a scale never before seen. Britain had a global empire that provided access not only to massive resources but vast markets for all the wonderful new goods the country was able to produce. All that was needed was an adequate money system that would allow all these new products to flow, through the mechanism of exchange, between people. There was a direct contradiction between the observable physical fact of abundance or potential abundance and the financial reality of scarcity. As the poor in Britain suffered a material standard of living often worse than that of the Negro slave, Bishop Berkely's observation of a people who "starve in the midst of plenty" is shown to be apt. In 1893, H D McCleod, an authority on the theory of banking, said: "At the present time, Credit is the most gigantic species of property in this country, and the trade in debts is beyond all comparison the most colossal branch of commerce......The merchants who trade in debts - namely bankers are now the rulers and regulators of commerce, they almost control the fortunes of states....banks are nothing but debt shops, and the Royal Exchange is the greatest debt market of Europe."

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The Worm in the Apple by Stephen Cook

MORE WAR

When World War One broke out in 1914, Britain was facing an all too familiar crisis. People started exchanging their bank notes for real gold, turning up at the bank exactly as people of old had turned up at the goldsmith's with their promissory notes, demanding the gold they had been promised was there. Naturally, the promises were false and gold was not there: the Bank of England held £9 million in gold reserves, whilst money (promissory notes) in circulation amounted to £240 million. In other words, for every £1 worth of real gold actually sitting in the vault, there were around twenty five promissory notes all claiming to represent the same piece of gold! Lloyd George and the commercial bankers feared a run on the bank that might well have resulted in a few well-heeled gentlemen being strung up from lamp posts, had the people rumbled their scam. And it might have dampened enthusiasm for the big, profitable war that someone had gone to so much trouble to start! In May 1914, Lloyd George, then Chancellor of the Exchequer, declared a suspension of gold payments, forbidding the population to claim the gold that was rightfully their property - or would have been had it really existed. Those who asked for gold in exchange for their money were given instead new Treasury Notes, legal tender printed up and issued by the government. The notes were called Bradburies, after the First Secretary to the Treasury, Sir John Bradbury, whose signature appeared on them. In all, £3.2 million of the new notes was issued and this simple creation of new money simply by printing it and issuing it, helped finance the initial stages of the war effort. This however was not the real intention of the new notes, which was to get the country's banks off the hook by heading off the impending run on the banks. Naturally this government creation of debt-free money, so effective and simple to do, set a dangerous example so far as the bankers were concerned and might give people some funny ideas. Once the immediate banking crisis was alleviated, therefore, the Bank of England moved quickly to expunge any further notion of the government actually doing anything effective to help the economy. Thomas Johnson, in The Finances of the Nation said in 1934: "[The Bank of England] insisted forcibly that the state must upon no account issue - 76 -


The Worm in the Apple by Stephen Cook any more money on this interest free basis: if the war was to be run, it must be run with borrowed money, money upon which interest must be paid......" The government, taking its orders from the banks, did as it was told; the Treasury acceded to their demands. A series of war loans were raised and added to the escalating National Debt. In fact, they comprised the greatest addition to the National Debt ever made, to the immense benefit of the bankers and a massive cost to the nation in that it contributed to the Great Depression. As each loan was spent by the government, another loan at higher interest was raised, with the creditors of the earlier loans able to transfer those loans to the higher rate of interest without charge. The government raised taxes considerably to recover some of the cost of the borrowing but tax revenues always fell short of escalating costs. In 1914, the National Debt was around ÂŁ1 billion. By 1918 it was ÂŁ8 billion. It should be pointed out that not all of this debt was in fact bank loans. The government tried to sell war bonds to pension funds, other non-banking institutions and to the public in order to raise money. The bonds were sold at 5% interest. Even here, the banks got in on the act. They encouraged their customers to buy war bonds to "help the war effort" and offered to lend them the money with which to buy the bonds. The bank lent to its customers, at 3.5% interest, money to buy war bonds. Thus people were using to buy the bonds money created as a debt by the banks. The bond buyers received 5% interest from their bonds, paid the bank back its loan at 3.5% and made a small profit. The banks made a big one - 3.5% on all the money they created! Britain never recovered from those debts. At every step she sank deeper into the debt mire. In The Nations, 1935, Christopher Hollis wrote: "While the nation struggled almost at death's door for its very existence....our banking fraternities continued to create for themselves a great volume of new credit and to lend that credit to us at interest, and indeed at progressively greater interest." The aftermath of the Napoleonic war and through the Victorian era demonstrated clearly the folly of trying to limit or pay off a national debt - or should have. When your currency only exists as a debt, to pay off the debt merely takes currency out of circulation, whereupon it must be replaced by further borrowing or your economy moves into depression. However from April 1920 both the American and British governments refused to extend their National Debts. There were immediate money shortages within both economies and the terrible effects that resulted from that shortage. In the United States, unemployment rose from negligible amounts to 6 million in three months! The UK experienced proportionately similar effects. - 77 -


The Worm in the Apple by Stephen Cook

The United States government then reversed its policy and began to run up its National Debt in order to ensure the country was well supplied with money. The amount of money in circulation rose by $1.9 billion. As a result, the US enjoyed 8 years of the greatest material prosperity the world had ever known - The Roaring Twenties. In the UK, the government stuck grimly to its deflationary policies, restricted its National Debt and watched the nation suffer much earlier than the US, the awful deprivations of the Great Depression. The government of the US supplied money to its economy at a rate one hundred times that of Great Britain and the effects of those restrictive policies on post war Britain were dramatic. Prices fell by 50% in 20 months. Business failures soared: there were 2,286 recorded in 1920, 5,640 in 1921 and 7,636 in 1922. This terrible fiscal policy was, however, of benefit to the banks which held the bulk of our war debts: as the nation attempted to pay them off, there was a massive flow of money into their coffers, not to mention the seizing of land and property in the resulting repossessions. As prices crashed, interest payments did not. The interest payments the banks were receiving were suddenly able to buy more goods in the economy because prices were down. In other words a fall in prices by half doubled the value of outstanding war loans!

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The Worm in the Apple by Stephen Cook

THE GREAT DEPRESSION

Poverty amidst plenty returned with a vengeance. In developed nations families starved while food was allowed to rot in the fields, or burnt as fuel or simply dumped. Farms and industries by the thousand went bankrupt. It was the same everywhere: people wanted to work to receive wages to buy from industry the goods they desperately needed and wanted to buy but industry could not hire them because no-one wanted to buy their goods! The UK had an industry working well below capacity - studies showed that, given demand, it could have tripled its output - and able to produce goods in abundance, for which it would have been happy to hire people. It had millions of people desperate to buy the goods that it desperately wanted to sell, in fact all the hallmarks of a highly developed, highly productive economy and a population literally dying for want of what it could produce. However, the financial version of the situation showed an economy deeply and hopelessly in debt, with poor demand for goods, low output, low employment and productive units going out of business like lemmings over a cliff. Yet demand was not low, not in the real world. What was missing was a means to express demand. How do you express a demand for a product? You offer money for it. Money was in short supply and that was all that was wrong. In such a climate of low prices and "poor demand" (i.e., poor consumer purchasing power) cheap, mass-produced goods began to gain a marked advantage as producers attempted to cut overheads and tailor what they could produce to low profit levels and low consumer spending power, and were able to deploy new technology to that end. Housing and construction standards dropped sharply. In the United States, the Depression was solved in the way governments in a debt economy solve problems of debt: instead of taking the simple, safe solution of creating their own money and issuing it debt-free, they went for more debt instead. Under Roosevelt's New deal, the US began a new round of borrowing and soared out of recession. In the UK, the government persisted with a restrictive policy: high interest rates, cuts in government spending, no help to industry - the natural result of which is more private and commercial borrowing. In a debt economy where money only comes into existence where it is loaned, borrowing has to occur to keep up the money supply. Somebody has to do it. Where the government won't, private individuals have to, if they want to survive. The gain from all this hardship, the hunger, poverty, bankruptcies and lost opportunities? - 79 -


The Worm in the Apple by Stephen Cook The country's national debt stood at £8 billion in 1918, twenty one years later, with the country still in the grip of the depression at the outbreak of World War Two, the national debt stood at £7 billion, a reduction in a still astronomical and un-repayable debt of just 12½%! And what happened thereafter? The debt soared in World War Two. It had reached £24.86 billion in 1946 then went on climbing to £26.6 billion in 1954 and has reached £360 billion today! A government that was unwilling to borrow to help its people fight the enemies Hunger and Misery at home was suddenly quite willing to borrow to fight an enemy known as Hitler abroad. The debt is still climbing. Relative to the size of the economy Britain's is a modest debt, the result of successive governments working hard to limit its rate of increase. Yet years of restrictions on government borrowing, in a money system where borrowing has to occur for money to exist, just trying to keep the borrowing under control has resulted in massive economic decline. The UK's economic decline is the fastest in economic history and with it have come loss of empire and world standing; decline in transport, services and infrastructure; the selling off of entire industries in order to raise money to help pay off the debt; food, farming and fishing brought to their knees; the vanishing of textile, footwear, steel, coal, electrical, aeronautic, shipbuilding and many other industries from our economic life. The government could have saved us all this misery at any time simply by issuing its own money debt-free to compensate for the money it was declining to borrow. Even while we stand today on the brink of our final humiliation, our vanishing from the world scene as a free nation, they still could – if they wanted to; or if we make them. Of course, Britain has not been alone on all this. Virtually every other country now has its own central bank; it is just that she has had hers the longest. There are other dimensions to all this aside from Britain's self-inflicted wounds. Let's have a look at the history of the thing from another perspective, that of the United States.

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The Worm in the Apple by Stephen Cook

TAXING THE COLONIES TO COVER THE DEBT

In the mid 1700s, Britain was reaching the height of her world power. In the half century since the formation of the Bank of England, she had fought war after costly war. She was £140 million in debt - a staggering amount in those days. The government decided to embark on a program of raising taxes in her American colonies in order to keep up interest payments on its debts. At that time the American colonies were still relatively poor. There was a shortage of gold and silver coins in the colonial economies of the day but they were as yet unacquainted with the blight of a privately owned central bank. Many of the colonies had experimented with creating and issuing their own paper money and some of these experiments had been quite successful. Benjamin Franklin was a supporter of the idea of the colonies producing their own paper money. Franklin, a scientist and politician, was a member of the Pennsylvania Assembly from 1751 to 1764. He sent was to London in 1757 to lobby Parliament about tax grievances. He remained in England for the next 18 years and achieved a repeal of the Stamp Act by which Britain had imposed a tax on all the documents of the American colonies. While he was in England, the colonies had begun very successfully using a paper currency called “Colonial Scrip,” which provided a reliable and stable medium of exchange. This was debt-free money spent into the economy in the public interest and not backed by either gold or silver. The colonial economies boomed. One day, officials of the Bank of England asked Franklin how he would account for the new-found prosperity of the colonies. To that he replied: "That is simple. In the colonies we issue our own money. It is called Colonial Scrip. We issue it in proper proportion to the demands of trade and industry to make the products pass easily from the producers to the consumers. In this manner, creating for ourselves our own paper money, we control its purchasing power, and we have no interest to pay to no-one." To Franklin and his colleagues back home, this was just common sense. Colonial Scrip was a simple solution that worked to the universal benefit. It was certainly something that England herself could have done with as her national debt mounted yearly and her economy teetered between boom and depression. What problem could anyone have with that? Franklin's problem was that being a decent chap, he did not realise that other men can be more anti-social in inclination. His revelations caused consternation among - 81 -


The Worm in the Apple by Stephen Cook the controllers of the Bank of England. The American colonists had twigged the secret of money! The bankers' scam depended on no-one realizing the powerful simplicity of the solution that lay within the grasp of all governments and there was now a severe danger the American success would set an example others would follow. Where would the bankers be without their power to take the wealth of other people simply by printing bogus promissory notes? The cat had to be stuffed back in the bag as soon as possible and preferably weighed down with bricks and tossed in the nearest river. Even then Parliament was taking its orders from the banking elite because in 1764 the Currency Act was passed, prohibiting colonial officials from issuing their own paper money and ordering them to pay all future taxes in gold and silver coin. The effect on the colonial economy was devastating. In his autobiography Franklin recalled: "In one year, the conditions were so reversed that the era of prosperity ended, and a depression set in, to such an extent that the streets of the colonies were filled with unemployed." Franklin also revealed that this was the cause of the American Revolution: "The colonies would gladly have borne the little tax on tea and other matters had it not been that England took away from the colonies their money, which created unemployment and dissatisfaction. The inability of the colonists to get power to issue their own money permanently out of the hands of George III and the international bankers was the prime reason for the Revolutionary War." One can only speculate as to how history might have turned out had not Parliament not so utterly alienated a colony of such vast potential.

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The Worm in the Apple by Stephen Cook

REVOLUTIONARY WAR

On April 19th 1775, the Revolutionary War began. By the time the first shots had been fired, the colonies had been drained of gold and silver coin by British taxation and were forced to resume printing and issuing their own paper money. At the beginning of the Revolution, some $12 million of United States money were in circulation but by the end of it there were some $500 million, a vast overproduction of the currency that failed to balance the amount of money in circulation against the actual money requirements of the economy. Earlier Colonial Scrip had worked admirably because just enough had been issued and circulated to facilitate trade but now excessive inflation of the money supply had occurred and the dollar was virtually worthless; shoes, for instance, were selling for $500 per pair. In 1781, towards the end of the Revolution, Congress allowed Robert Morris, their Financial Superintendent, to open a privately owned central bank. Morris was a wealthy man who had prospered during the war with the British by trading in war materials. The new central bank was called the Bank of North America, a virtual carbon copy of the Bank of England. Like any other bank, it practiced Fractional Reserve Lending - loaning out money it did not have and charging interest on it - providing a way for its shareholders to become very rich very quickly at the expense of the American government and people and at virtually no risk. The bank's charter required its investors to provide $400,000 of initial capital. However, just as the Bank of England's original investors failed to honour their commitment, what happened with the new Bank of North America was very different to what its charter required. Morris used his political influence to have money that had been loaned to the United States by France deposited with his bank. This money was then loaned to Morris and his friends and the loans used to invest in shares in the bank! The bank was given a monopoly over the national currency. The dangers of such shenanigans soon became self evident: the value of American currency continued to plummet and in 1785 the bank had been such a miserable failure that its charter was not renewed. What possessed Congress to approve such an institution? One must visualize the circumstances: a government immersed in the confusions and desperations of war, with the outcome as yet uncertain; a Congress with many - 83 -


The Worm in the Apple by Stephen Cook among its ranks who did not fully understand money and had other problems more pressing upon which to focus their attention; a powerful pro-banking lobby on the revolutionary side who well understood the opportunity provided by talking Congress into setting up a central bank. William Findley, a Congressman from Pennsylvania and leader of the effort to shut down the bank said: "The institution, having no principle but that of avarice, will never be varied in its object....to engross all the wealth, power and influence of the state." The main players behind the central bank; Alexander Hamilton, then Secretary of the Treasury, his mentor Robert Morris, Congress' Financial Superintendent, and Thomas Wyling, the bank's President, did not, however, give up on the idea of a central bank. Five years later they managed to get a second central bank approved by Congress.

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The Worm in the Apple by Stephen Cook

ANOTHER CENTRAL BANK

This bank was to be called the First Bank of the United States. Wyling was again the bank's president and the only difference between the new bank and the old one was the name. In 1787, colonial leaders assembled in Philadelphia to replace the Articles of Confederation. Among their number were James Madison and Thomas Jefferson, both implacably opposed to the central bank idea, having seen the problems created by the Bank of England. Jefferson said: "If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation the banks and the corporations which grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers occupied. The issuing power of money should be taken from the banks and restored to Congress and the people to whom it belongs. I sincerely believe the banking institutions having the issuing power of money are more dangerous to liberty than standing armies." During the debate over the monetary system, another founding father, Gouvernor Morris, blasted the motivations of the main players behind the central bank idea. He was in a position to know these motivations intimately because along with Robert Morris, his one-time boss, and Alexander Hamilton he had presented the plans for the original Bank of North America to the Congress in the last year of the Revolutionary War. Gouvernor Morris went on to chair the committee that drew up the final draft of the United States Constitution, one of the most enlightened political documents ever written. On the 2nd July 1787, in a letter to James Madison, he stated: "The rich will strive to establish their dominion and enslave the rest. They always did. They always will....They will have the same effect here as elsewhere, if we do not by the power [of government] keep them in their proper spheres." Despite Gouvernor Morris' change of heart and defection from their ranks, Hamilton, Robert Morris, Wyling and their European backers were not about to give up on their golden goose. They managed to convince the majority of the delegates to the Convention not to grant Congress the power to print paper money. Perhaps this was understandable: the delegates were still horribly aware of the inflation that had been caused by the - 85 -


The Worm in the Apple by Stephen Cook over-issue of paper money during the war and had forgotten how Colonial Scrip had worked so well a little over twenty years earlier. The international financiers for whom Hamilton and his group worked were certainly determined to see no repeat of America's successful experience with paper money. The Constitution states: "Only the Congress shall have the power to coin money, regulate the value thereof...." omitting both the paper and debt forms of money and although the intent is clear the letter left the door wide open for the international financiers and their ever escalating issues of dishonest promissory notes, an omission at which the bankers must have rubbed their hands with glee. One factor that may have assisted the pro-banking lobby was the fact that there were recurrent shortages of gold and silver in the economy, whether contrived by those who controlled the gold and silver supplies or as a result of a growth in population and economic activity with which gold and silver supplies could not keep pace. There were those who wanted to do away with fractional reserve lending, pointing out that issuing paper money well in excess of their gold and silver reserves and thus creating money was a clear breach of the spirit, if not the letter, of the constitution. Those who favored the banking practice of issuing notes for gold or silver that did not actually exist were able to point to the gold and silver shortages and say that paper currency was absolutely needed if adequate money were to be circulated. It could be said that right there a wonderful opportunity was missed: to establish in the new nation a stable money system whose success in time other nations would surely have copied. In 1790 the bankers got their central bank. Alexander Hamilton, First Secretary of the treasury put a bill before Congress for a new privately owned First Bank of The United States. The new central bank was given a twenty year charter. Based in Philadelphia, it was given a monopoly on printing US currency even though 80% of its stock was to be held by private investors. The remaining 20% was to be provided by the US government. Yet again the bank's investors managed to put one over on the government: that 20% government investment ($2 million cash) was used as the reserve against which, by fractional reserve lending, the bank loaned to its private investors the money they needed to buy their shares in the bank! This, incidentally, was the same year that Amschel Rothschild, from his bank in Frankfurt announced: "Let me issue and control a nation's money and I care not who makes the laws." US Presidential candidate Charles Collins summed up Hamilton's role thus: - 86 -


The Worm in the Apple by Stephen Cook

"Alexander Hamilton was a tool of the international bankers. He wanted to create the Bank of the United States and did so." The name First Bank of the United States was deliberately chosen to conceal the fact that it was a private bank, owned by private investors as a risk free investment for private profit. The bank did not belong to the American nation at all. As had been the case with the Bank of England, the names of the bank's private investors were never revealed, although it became common belief that the Rothschild family was the power behind it. The bank was sold to Congress as a way of stabilizing the currency and controlling inflation just as our modern central banks declare their objectives to be monetary stability and controlling inflation. And just as happens with central banks today, the First Bank of the United States presided over anything but monetary stability. In the first five years the US government borrowed $8.2 from the central bank - and prices rose by 72%! Thomas Jefferson, the new Secretary of State, watched the rampant and completely unnecessary borrowing with helpless frustration. Unable to stop what was happening, he said: "I wish it were possible to obtain a new amendment to our Constitution...taking from the federal government their power of borrowing." Both the Bank of North America and the First Bank of the United States failed; in fact they created the opposite economic effects to the ones they had promised Congress.

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The Worm in the Apple by Stephen Cook

YET ANOTHER CENTRAL BANK

In 1811, a bill was put before Congress to renew the bank's charter. A heated debate followed in which the proposal met stiff opposition. The legislatures of both Pennsylvania and Virginia passed resolutions asking Congress to kill the bank. The press of the day attacked the bank openly, those being days when the press was still free. Opposition was so heated that the prospects did not look good for the First Bank of the United States gaining a renewal of its charter. Some commentators have reported that Nathan Rothschild himself threatened that if the US did not renew the bank's charter, the US would find itself embroiled in a costly war. The renewal bill was defeated by a single vote in the House of Representatives and deadlocked in the Senate. James Madison was by then the United States' President, himself an arch opponent of the central bankers. His vice President, George Clinton, broke the deadlock in the Senate and the First Bank of the United States ceased to be. Within five months, England attacked the United States. This was the war of 1812, but England was already heavily committed to fighting Napoleon in Europe and war with America finished without victory for either side. In 1816, a year after Napoleon's defeat at Waterloo and Rothschild's takeover of the Bank of England, the United States Congress passed a bill authorizing the setting up of yet another privately owned central bank, the Second Bank of the United States, whose charter was a carbon copy of the previous central bank that had been killed just four years earlier. The government put up the cash for 20% of the shares and surprise, surprise - the magic of fractional reserve lending was used to turn it into loans for private investors to buy their 80% of the shares for this risk free investment. Again, the identities of the primary stockholders were a closely guarded secret. Around a third of the shares were owned by foreigners and it was claimed that the Second Bank of the United States was as deeply rooted in Europe as it was in the US. Having taken over the Bank of England, the Rothschilds were believed to be behind the new American central bank too.

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The Worm in the Apple by Stephen Cook

ANDREW JACKSON

Twelve years went by. By 1828, the American people were fed up with manipulation of their economy by the central bank. Opponents of the bank nominated an able and highly respected senator from Tennessee, Andrew Jackson - hero of the Battle of New Orleans - to run for President. Few people actually expected Jackson to win and the bankers had long since learned how to manipulate the political process using the power of the money they now virtually monopolized. However, to their dismay and everyone's surprise, Jackson won the presidential race and was elected to office in 1828. The new President was determined to break the power of the central bank and lost no time once he was in office in trying to do just that. Unfortunately the bank's charter was only due for renewal in 1836, the last year of his second term in office. During his first term, Jackson contented himself with doing what he could and focused on removing from government service the bank's many minions. As a result, no less than 7000 of the government's 11000 federal employees were removed from post and replaced by people whose first allegiance was to their country and its elected government, not its central bank. In 1832, with Jackson's expected re-election looming, the bankers made their move, gambling that, in an election year, Jackson would be reluctant to stir up controversy. They asked Congress to pass a bill renewing the bank's charter four years early. Congress obliged. The renewal bill was sent to Jackson for approval. Jackson however was made of sterner stuff than they imagined. He vetoed the bill. His message to Congress is regarded as one of the great American documents and clearly states his perception of a government's duties to all its citizens, rich or poor: "It is not our own citizens only who are to receive the bounty of our Government. More than eight millions of the stock of this bank are held by foreigners....Is there no danger to our liberty and independence in a bank that in its nature has so little to bind it to our country?.....Controlling our currency, receiving our public moneys and holding thousands of our citizens in dependence....would be more formidable and dangerous than a military power of the enemy. "If [government] would confine itself to equal protection, and, as Heaven does its rains, shower favour alike on the high and the low, the rich and the poor, it would be an unqualified blessing. In the act before me there seems to be a wide and unnecessary departure from these just principles." - 89 -


The Worm in the Apple by Stephen Cook When, one wonders, did men of such courage and stature and such unswerving allegiance to high ideals over political expediency disappear from our political life? Congress was unable to override Jackson's veto. In July 1832, Jackson had to stand for re-election and for the first time in history an American President took his campaign on the road, bringing his argument directly to the American people. His slogan was "Jackson and no bank." The Republican Party ran Senator Henry Clay against Democrat Jackson and the banks invested $3 million, a colossal sum, in Clay's campaign. Jackson won by a landslide and was re-elected in November 1832. Jackson swung into action, ordering his First Secretary of the Treasury, Lewis McClain to begin the process of removing government deposits from the bank. When McClain refused to do so, Jackson fired him and replaced him with William J Duane. When Duane also refused to comply with the presidential order, Jackson replaced him in turn with Roger B Tainey. Tainey complied and started the process of removing government deposits from the bank's vaults on the first of October 1833. The central bank's then president, Nicholas Biddle, began using his political influence in the Congress to have Congress reject Tainey's nomination. The bankers were by then, and had been for some time, an extremely powerful lobby within the corridors of power. The fact that their influence was based upon money is no better illustrated than by the case of Daniel Webster, Leader of the Senate, who was found to be in the pay of the Second Bank of the United States. After Webster had quashed a legal case against the bank, he wrote to Biddle, the bank's president, reminding him of their financial arrangements: "I believe my retainer has not been renewed or refreshed as usual. If it be wished that my relation to the bank should be continued, it may be as well to send me the usual retainers." As ever, the best intentions of honest men were jeopardized by the less than honest infiltrated among them. In fact, so sure was Biddle of his money power over the workings of the Congress that, driven by what appears to have been sheer arrogance, he went so far as to openly threaten to cause a depression if the bank's charter were not renewed: "This worthy President thinks that because he has scalped Indians and imprisoned Judges, he is to have his way with the Bank. He is mistaken.....Nothing but widespread suffering will produce any effect on Congress.....Our only safety is in pursuing a steady course of restriction - and I have no doubt that such a course will ultimately lead to restoration of the currency and the recharter of the bank." Such an unsavory fit of honesty gives us a rare but stunning revelation of the bankers' view of their position in the affairs of men, a position not only senior to - 90 -


The Worm in the Apple by Stephen Cook elected Presidents but in possession of the right to destroy the lives of millions of ordinary people for their own gain. Jackson, elected by a landslide on a platform of "Jackson and no bank" had a clear mandate from the people for what he was trying to do, yet Biddle was clearly content to defy not only him but through him the expressed will of the American people by threatening to crash their entire economy unless he got his way. One is reminded of a quote from Thomas Jefferson: "I believe the banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a money aristocracy that has set the government at defiance...." Biddle carried out his threat. The bank started to contract the money supply by calling in its loans and refusing to grant new ones. This created a financial panic and a depression quickly set in; wages and prices slumped and unemployment and bankruptcies soared. Biddle tried to lay the blame for the crisis on Jackson's government, claiming that it was caused by the government's withdrawal of capital from the bank. The press, by then falling more and more under the bankers' control, was rallied to the bank's cause and it blasted Jackson in newspaper editorials. At that time it was still legal to pay politicians for their support and the bank threatened to withhold payments from its paid supporters in the Congress. Congress duly assembled and censured the President by a vote of 26 to 20. Jackson was never one to shirk a battle and stuck to his guns. Then the tide turned. The government of Pennsylvania came out in Jackson's support and denounced the bank. Biddle was caught boasting in public that the bank would crash the economy. The House of Representatives voted in April 1834 against re-chartering the bank and set up a committee to investigate whether the bank had caused the crash. When the committee arrived at the bank's door in Philadelphia, armed with a subpoena empowering them to examine the bank's books, Biddle refused both to give them up and to allow the committee to examine correspondence with congressmen concerning loans and advances he had made to them, nor would Biddle give evidence before the committee in Washington. On January 8th 1835, Jackson paid off the final installment on the national debt. He was the only President ever to pay it off. Today that debt stands at some $6 trillion and as the US money stock only amounts to some $5 trillion, the point has long since been passed where it is even remotely repayable. Three weeks later, on January 30 1835, an assassin named Richard Lawrence tried to shoot Jackson but mercifully both guns he was carrying jammed and failed to go - 91 -


The Worm in the Apple by Stephen Cook off. Lawrence was tried and found not guilty by reason of insanity. After his release he told friends that powerful people in Europe had paid him to kill the president, promising to protect him if anything went wrong. It would appear they kept a promise for once. In 1836, when the bank's charter ran out, it was not renewed. Biddle was arrested, charged with fraud and died soon after, still tied up in litigation. Thanks to President Andrew Jackson, the United States remained free of a central bank for over seventy years.

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The Worm in the Apple by Stephen Cook

CIVIL WAR

Unfortunately, although Jackson had removed the parasitic institution of a central bank from the backs of the American people, he had failed to go one step further and recognize the underlying source of the money power: the practice of fractional reserve lending. Fractional reserve lending remained in operation, the scam run by the country's numerous state chartered banks. This continued to fuel economic instability in the years leading up to the American Civil War. But at least the central bank was out of the picture and as a result America was able to thrive as she expanded into the virgin territories of the west. During this period, the international financiers fought hard to reestablish their lost power and when this availed them little, they resorted to their tried and trusted formula: war to create debt and through debt, dependency on further debt. If the bankers could not get their way, then America could be plunged into another costly war just like the war of 1812 with England after the closure of the First Bank of the United States. This time though, it would be a civil war. One month after the inauguration of President Abraham Lincoln, in 1861, the first shots of the Civil War were fired at Fort Sumter in South Carolina. In a matter of a few years, Abraham Lincoln established himself deservedly as one of the world’s greatest statesmen, a subject worthy of study but beyond the scope of this brief sketch. Contrary to popular belief, however, Lincoln's concern in fighting the war was not the freeing of slaves but the saving of the Union. Lincoln well understood that sudden and wholesale freeing of slaves in the South would not only crash the South's economy and lead to widespread suffering among all sectors of the society but would result too in tens of thousands of freed slaves being dumped overnight into a state of vagrancy and starvation. He certainly was not in favor of slavery but favored a gradual, sustainable transition of the slaves over to paid labor, with the provision of education for black children being a key factor. Of course a debt money system where spending power is always in short supply, in that it creates a pressure for cost-cutting in labor, could be said to have slavery as its ultimate consequence, its ideal economic arrangement, and a more sustainable system that provided an adequate circulation of debt-free money would be needed to achieve such a transition. Be that as it may, Lincoln had no intention before the war of ending slavery. In his - 93 -


The Worm in the Apple by Stephen Cook inaugural address, one month before the outbreak of hostilities he said: "I have no purpose, directly or indirectly, to interfere with the institution of slavery in the states where it now exists. I believe I have no lawful right to do so, and I have no inclination to do so." Even after the war had begun, Lincoln continued to insist that the Civil War was not about slavery: "My paramount objective is to save the Union, and it is NOT either to save or destroy slavery. If I could save the Union without freeing any slave, I would do it." So what were the causes of the war? There were many factors involved. When the Southern States seceded from the Union, it was indeed through a fear that Lincoln's presidency would abolish slavery. When he reluctantly sent soldiers to Fort Sumter, it was with the request that the southern states recognize and rejoin the Union. There was no request or demand that they abolish slavery. The soldiers were fired upon and the civil war had started. The Southern States owed some $200 million to the money lenders in New York and were heavily reliant on cotton exports, having been forced to specialize in these exports by their creditors. There was heavy resentment in the South of the high prices of goods from the North, for the North at this time was heavily riddled with debt and the pressure of debt servicing was pushing up the prices of its goods. The North was the country's financial centre and money and power was flowing to it as a result. The Northern industrialists had used protective tariffs to prevent the Southern States from buying cheaper goods from Europe. Europe retaliated by stopping cotton imports from the Southern States. The Southern States were therefore in a financial cleft stick. Heavily in debt themselves, they were forced to pay more for the necessities of life whilst income from the export of cotton goods crashed. The South was therefore in distress and its mood was one of anger. The central bankers, stung by Jackson's defeat of their central bank 25 years earlier, since which America's economy had set a bad example to the rest of the world by expanding, were looking for an opportunity to regain control over America. It would be to their advantage if the rich new nation could be split and rendered dependent by war. A wild conspiracy theory? Well, that notion came from, among others, one well placed observer of the day, a man eminently qualified to make such an observation. - 94 -


The Worm in the Apple by Stephen Cook

This was Otto Von Bismarck, Chancellor of Germany. Bismarck was an imaginative and pragmatic politician who had successfully unified the German states and founded the modern German nation. His view on the matter was this: "The division of the United States into federations of equal force was decided long before the Civil War by the high financial powers of Europe. These bankers were afraid that the United States, if they remained as one block, and as one nation, would attain economic and financial independence, which would upset their financial domination over the world." Within three months of the start of the Civil war, European central banks loaned Napoleon III of France, nephew of Bonaparte, Ff210 million to seize Mexico and to station troops along Mexico's border with the US, taking advantage of America's preoccupations to reopen Central and South America to European colonization. Great Britain at the same time moved 11,000 troops into Canada and stationed them along the United States' northern borders, whilst the British fleet went to war alert, ready for action should it be needed. The threat was obvious and Lincoln recognized that his country's situation was dire. With the armies of the world's then great powers encamped on his northern and southern borders and a hostile fleet prowling the seas, he knew that at all costs he must preserve the Union. If the US split became a permanency, whatever political entities that resulted would not be strong enough to resist the superpowers rattling sabers all along their borders.

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The Worm in the Apple by Stephen Cook

GREENBACKS

Lincoln, however, had economic problems that, with a civil war on, he needed like a hole in the head. As war loomed, the threat of it had led to people changing their paper currency for gold. As the banks' gold reserves ran low, the banks were left over-exposed and started calling in their loans, threatening the economy with contraction and disaster just when the government needed money to fight the war. In 1861, Lincoln went with his Secretary of the Treasury to the New York banks to see what kind of deal was on offer. When the banks, anxious to see the Union fail, offered to lend him money at 24-36% interest, Lincoln turned them down flat, recognizing that loans under those terms were a trap he dare not lead his country into. Lincoln returned to Washington and put an old friend, Colonel Dick Taylor in charge of solving the problem of financing the war. When Lincoln later asked him what he had come up with, Taylor replied: "Why Lincoln, that is easy; just get Congress to pass a bill authorizing the printing of full legal tender Treasury Notes....and pay your soldiers with them and go ahead and win your war with them also." But Lincoln wanted to know if the people would accept the new notes. Taylor replied: "The people or anyone else will not have any choice in the matter, if you make them full legal tender. They will have the full sanction of the government and be just as good as any money; as Congress is given that express right by the Constitution." That is precisely what Lincoln did. In 1862-3 he printed up $460 million worth of the new Treasury Notes. So that they were easy to distinguish from other notes already in circulation, he had them printed using green ink on one side. Thus, the new notes became known as Greenbacks. With this new money, created by the government and simply spent into the economy without debt, he was able to equip his army and pay his soldiers. By 1865 he had won the war - and without leaving his nation saddled with debts anywhere near as great as they would have been had he borrowed that $460 million from bankers at interest. Lincoln well understood how the banking scam was working, who was behind it and what the simple solution was to the whole mess: "The government should create, issue, and circulate all the currency.....needed to satisfy the spending power of the Government and the buying power of the - 96 -


The Worm in the Apple by Stephen Cook consumers. "The privilege of creating and issuing money is not only the extreme prerogative of Government, but it is the Government's greatest creative opportunity. "By the adoption of these principles....the taxpayers will be saved immense sums of interest. Money will cease to be the master and become the servant of humanity." The British press had a different view of things. The London Times, for instance, acting as a mouthpiece for the bankers and apparently quite oblivious to the enormity of what it was saying, said in an editorial of the day: "If this mischievous financial policy, [the issue of greenbacks] which has its origins in North America, shall become obdurated down to a fixture, then, the Government will furnish its own money without cost. It will pay off debts and be without debt. It will have all the money necessary to carry on its commerce. It will become prosperous without precedent in the history of the world. The brains and wealth of all countries will go to North America. That country must be destroyed or it will destroy every monarchy on the globe." What the writer of the article meant of course was that it will destroy every banking scam on the globe. If monarchies had implemented the very reforms being discussed they too would have flourished beyond all imaginings. But evidently, the bankers employed eloquent but brain dead morons to spread their propaganda. The writer completely missed the point that all the "terrible consequences" he was describing were exactly the things any honest person in his right mind would want. The editorial comprised one of the best arguments for monetary reform one could hope for! A "Hazard Circular" circulated to all US banks during the Civil War puts the banking point of view just as eloquently: "...[T]he European plan, led on by England, is that capital shall control labor by controlling wages....The great debt that capitalists will see to it is made out of the war must be used to control the value of money. To accomplish this, the Government bonds must be used as a banking basis....We are now waiting for the Secretary of the Treasury of the United States to make his recommendation. It will not do to allow greenbacks, as they are called, to circulate as money any length of time, as we cannot control that, but we can control the bonds and through them the bank issues." The bankers in other words, hated greenbacks and they were none too happy with the fact that the US now had another President who had seen through their scam to a positive and unarguable solution. - 97 -


The Worm in the Apple by Stephen Cook Lincoln's Greenbacks were so successful that the following year, 1863, with the Civil war approaching its decisive stages, and the Treasury in need of authority from Congress to issue more Greenbacks, the bankers contrived to have the National Bank Act pushed through Congress. Under this Act, the banks were granted virtually tax-free status and the exclusive monopoly on issuing new paper currency. Abraham Lincoln must have longed for a Congress less in tune to the needs of the banks than the needs of their country and its people. Or an electorate itself better informed about money, able to fully understand the consequences of what their "representatives" were up to and thus enforce on Congress the levels of integrity a true democracy requires. Unfortunately, he was building a world with broken democratic straws and did not get the back-up he needed. No further issues of Greenbacks were made, although the ones already issued continued to circulate. From that point on, the US money supply would be issued by bankers as a debt on which the nation would have to pay interest. Historian, John Kenneth Galbraith reports: "In numerous years following the war, the Federal Government ran a heavy surplus. It could not [however] pay off its debts, retire its securities, because to do so meant there would be no bonds to back the national banknotes. To pay off the debt was to destroy the money supply." With the Civil War still raging, later in 1863, Lincoln got help from an unexpected source: Tsar Alexander II of Russia. The Tsar, like Bismarck in Germany, knew what the international bankers were up to and had point blank refused for many years to allow a central bank to be set up in Russia. He was well aware that if America too remained out of the clutches of the bankers, then his own position was that much safer. If however, the bankers were successful and the US was divided up and the pieces handed over to Britain and France, nations under banking control, his own country would in time fall as well. He gave orders that if either Britain or France actively intervened in the US, it was to be regarded by the Russian Empire as an act of war. To underscore the point he dispatched part of his pacific fleet to San Francisco. Tsar Nicholas, "The Liberator", was assassinated in 1881, another among many amazingly fortuitous deaths of leaders who were opposed to the schemes of the money powers. In 1864 Lincoln was re-elected. A highly respected President of immense statesmanship with four years in office stretching before him, who was unequivocally - 98 -


The Worm in the Apple by Stephen Cook in favour of monetary reform, would almost certainly have taken back the monopoly the bankers had just managed to wangle through Congress. On November 21st 1864 Lincoln wrote to a friend: "The money power preys upon the nation in times of peace and conspires against it in times of adversity. It is more despotic then monarchy, more insolent than autocracy, more selfish than bureaucracy." Lincoln's deputy, Solomon P Chase had come to regret his own role in steering the National Banking Act through Congress: "My agency in promoting the passage of the National Banking Act was the greatest financial mistake of my life. It has built up a monopoly which affects every interest in the country." All in all the prospects did not look good for the bankers retaining hold of their power, with four years of Abraham Lincoln stretching before them. However, those prospects perked up considerably when just 41 days after his inauguration and 5 days after the South's General Lee surrendered, Lincoln was shot dead by John Wills Booth. Bismarck lamented: "The death of Lincoln was a disaster for Christendom. There was no man in the United States great enough to wear his boots....I fear that foreign bankers with their craftiness and tortuous tricks will entirely control the exuberant riches of America, and use it systematically to corrupt modern civilization. They will not hesitate to plunge the whole of Christendom into wars and chaos in order that the earth shall become their inheritance." As we look around the world today we can only wonder at how right Bismarck's predictions turned out to be.

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The Worm in the Apple by Stephen Cook

THE FINGER OF SUSPICION

Bismarck was not alone in his belief that the bankers had been responsible for Lincoln's assassination. Similar accusations were expressed in Canada 70 years later, in 1934. Gerald G McGreer, an attorney of considerable status, delivered a five hour speech before the Canadian House of Commons, blasting Canada's debt-based money system and implicating the international bankers in Lincoln's assassination. This was during the bank-engineered Great Depression that was ravaging Canada and the rest of the world. McGeer produced evidence that had originally been deleted from public records but which was provided to him by Secret Service agents. The information concerned details of the trial of John Wills Booth that had been released after Booth's death. McGeer claimed that the evidence showed Booth had been a mercenary in the pay of international bankers. As reported in the Vancouver Sun on 2nd may 1934: "Abraham Lincoln....was assassinated through the machinations of a group representative of the international bankers who feared the United States President's national credit ambitions - and the plot was hatched in Toronto and Montreal. There was only one group in the world at that time that had any reason to desire the death of Lincoln. "They were the men opposed to his national currency program and who had fought him throughout the whole of the Civil war, on his policy of greenback currency." It is interesting that McGeer claimed Lincoln was murdered not only because of his opposition to a central bank but because the central bankers had wanted to base America's currency on gold - a commodity whose supply they monopolized and controlled. Lincoln had thwarted them there too, by introducing a currency based only on the good faith of the United States government. The same article said: "They were the men interested in the establishment of a Gold Standard money system and the right of the bankers to manage the currency and credit of every nation in the world. "With Lincoln out of the way they were able to proceed with that plan and did proceed with it in the United States. Within eight years after Lincoln's assassination, silver was demonetized and the Gold Standard money system set up in the United States." - 100 -


The Worm in the Apple by Stephen Cook Why was gold good for the bankers and silver bad? Silver was by then plentiful in the US, fifteen times more so than gold. Being plentiful, silver was harder to control. That simple.

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The Worm in the Apple by Stephen Cook

AFTER LINCOLN

Since Lincoln, and with the exception of a brief period in John F Kennedy's presidency, no debt-free currency been issued in the US. A final act of venal stupidity finally killed off Lincoln's legacy in 1994, when the Regal Act authorized the replacement of Greenbacks. Despite frequent attacks on them by central bankers, they had continued to be popular and to circulate in the economy until that time. They were replaced with debt-based banknotes. With Lincoln out of their hair, the next goal of the bankers was to secure complete control over America's money. This was not an easy task for them. As the American West had been opened up, silver had been discovered in vast quantities, whilst Lincoln's Greenbacks were generally very popular. Historian W Cleon Skausen comments: "Right after the Civil War there was considerable talk about reviving Lincoln's brief experiment with the constitutional monetary system. Had not the European moneytrust intervened, it would no doubt have become an established institution." Indeed, the international financiers watched with growing alarm as support for Lincoln's monetary ideas grew. In 1866, one year after Lincoln's murder, Congress again got busy at the behest of the central bankers and passed the Contraction Act. This masterpiece of suppression authorized the Secretary of the Treasury to begin recalling some of Lincoln's Greenbacks. Naturally that contracted the money supply. The monetary policy all through the 1870s was one of deflation of the economy occasioned by steady withdrawal of the Greenbacks, a deflation in which prices tumbled: a bushel of wheat for instance dropped in price by half. Many farmers went bankrupt, while others found it impossible to extricate themselves from debt. With the cost of debt servicing cutting into his profit margins, the farmer's only remedy was to produce more cheaply than his competitors in order to keep hold of his slice of a dwindling market. This involved the introduction of new machinery and mass production techniques but as each new invention that gave one farmer a lead was taken up and used by his competitors, that lead was lost. Once the lead was lost and he could not maintain the required levels of sales, the farmer had no choice but to accept a lower standard of living or go into debt. Once he was in debt his creditors could control his policy and oblige him to produce for exports, as had happened to the southern farmers before the Civil War. - 102 -


The Worm in the Apple by Stephen Cook Charles Holt Carrol eloquently describes the slump that followed withdrawal of Greenbacks: "...[I]t has crippled trade, sunk assets, ruined debtors, destroyed enterprises, thrown labor out of employment and caused widespread misery in society.....[I]t is itself a consequence of inflation with false money....we feed the money channel with debt, the equivalent of nothing, and the very opposite of money." Authors Theodore R Thoren and Richard F Warner in their book “The Truth In Money Book:� "Hard times which occurred after the Civil War could have been avoided if the greenback legislation had continued as President Lincoln had intended. Instead there were a series of money panics which put pressure on Congress to enact legislation to place the banking system under centralized control. Eventually the Federal Reserve Act was passed on December 23rd 1913." Once more we see the tactics of the international bankers: cause a contraction in the money supply, thereby creating a depression and instability, and then convince politicians that the solution to depression and instability is "centralized control". Centralized control means the setting up of a privately owned central bank run for private profit, whose main tactic for amassing vast profits is the creation of depression and instability. Politicians fall for it time after time after time.

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The Worm in the Apple by Stephen Cook

CREATING DEPRESSION

By 1876 corruption and insider dealing were rife in the American as well as the British stock exchanges. President Rutherford B Hayes complained at the time: "This is government of the people, by the people and for the people no longer. It is a government of corporations, by corporations and for corporations." Mathew Johnson, author of The Robber Barons commented: "The halls of legislature were transformed into a mart where the price of votes was haggled over, and laws, made to order, were bought and sold." Despite rapidly rising output, the United States at the end of the nineteenth century was, like England, plagued by appalling working conditions, subsistence wages, and child labor, while strikes and other protests were put down ruthlessly using private security forces and state and federal troops. The bankers' strategy was threefold: 1.) Create a Depression by removing money from circulation. 2.) Remove as much money from the system as necessary to render Americans so desperate they would accept any proposed solution, or would be too weak to oppose any solutions with which they disagreed. 3.) Move in with a "solution" for instability: centralized control through a privately owned central bank. Contraction did not only focus on Greenbacks, along with this the tried and trusted formula of calling in loans and refusing to grant new ones, was used to full effect. In just ten years, two thirds of the American money supply was removed from circulation. In 1866 there were around $1.8 billion in circulation, about $35.46 per head of population. By 1876 there were only $0.6 billion in circulation - just $14.60 per head! By 1886, there were $0.4 billion in circulation, a paltry spending power of $6.67 per head of population! This represented a 760% drop in buying power over 20 years, a devastating decline. Today the pseudo-science of economics, created to provide a smokescreen of labyrinthine complexity that hides even from intelligent men the underlying simplicity of true common-sense principles, tries to portray such periods of boom and - 104 -


The Worm in the Apple by Stephen Cook depression as a natural consequence of a mythical phenomenon called the Business Cycle. Far from being a naturally occurring phenomenon inflicted on Man by treacherous fates in order to punish him for trying to build a decent productive civilization, the Business Cycle is entirely and deliberately created by banks periodically contracting the money supply. Once you can see through the economic gibberish that obscures the truth, booms and depressions are not difficult to understand - or to avoid. In 1872, one Ernest Seyd was given $500,000 by the Bank of England and sent to the US with orders to bribe the necessary Congressmen to get silver demonetized. The next year, 1873, Congress passed the Coinage Act and the minting of silver coins abruptly stopped. In fact, Representative Samuel Hooper who introduced the bill to the House of Representatives even acknowledged that "Mr Seyd" actually drafted the legislation! It gets worse: in 1874, Seyd himself admitted: "I went to America in the winter of 1872-73, authorized to secure, if I could, the passage of a bill demonetizing silver. It was in the interest of those I represented the governors of the Bank of England - to have it done. By 1873, gold coins were the only form of coin money." But the bankers had not yet won. In 1876, with one third of the nation's entire workforce unemployed, people were clamoring for a return to Lincoln's Greenbacks, or a return to silver money, anything that would make money more plentiful. The population was growing restless. In the same year Congress appointed the US Silver Commission to study the whole problem. Their report clearly blamed the bankers for the money contraction and compared the money contraction in the US after the Civil War with the fall of the Roman Empire: "The disaster of the Dark Ages was caused by decreasing money and falling prices......without money, civilization could not have had a beginning and with a diminishing supply, it must languish and unless relieved, finally perish. "At the Christian era the metallic money of the Roman Empire amounted to $1,800,000,000. By the end of the fifteenth century it had shrunk to less than $200,000,000 [one ninth!].....History records no other such disastrous transition as that from the Roman Empire to the Dark Ages." Despite that report, Congress did nothing, which causes one to reflect that though the Dark Ages may have been caused by a contraction of the Roman currency, the contraction was caused by someone taking money out of circulation, and someone taking money out of circulation happened because men in a position to do something - 105 -


The Worm in the Apple by Stephen Cook to correct it did nothing. In 1877 - the following year - riots broke out from Pittsburgh to Chicago as people made it very plain they had had enough of being starved half to death in a land abundant with food. The bankers met to decide what action to take but decided not to take any. They were not about to give up the power they had achieved just because a few million plebs were starving. They opted for sitting tight and waiting it out. At a meeting of the American Banking Association (ABA) that year, they urged their members to do everything they could to suppress any popular move towards a return to Greenbacks. The ABA Secretary, James Buel wrote to members encouraging them to use their influence to sway both Congress and the press. His words provide us with another insight into the modus operandi, both past and present, of these pillars of the community: "It is advisable to do all in your power to sustain such daily and weekly newspapers, especially the Agricultural and Religious press, as will oppose the greenback issue of paper money and that you will also withhold patronage from all applicants who are not willing to oppose the government issue of money. "....To repeal the Act creating bank notes, or to restore to circulation the government issue of money will be to provide the people with money [emphasis added] and will therefore seriously affect our individual profits as bankers and lenders. "See your Congressman at once and engage him to support our interests that we may control legislation." Thus, as pressure from the electorate demanded change, the press and the bankers' friends were mobilized to sway public opinion away from the government issue of debt-free currency - and away from the truth. The New York Tribune reported on 10th October 1878: "The capital of the country is organized at last and we will see whether Congress will dare to fly in its face." In other words, let's see who Congress is more scared of: the money powers or the people. The whole operation was not entirely successful. In February 1878, Congress passed the Sherman Law, authorizing a limited coining of silver dollars. However, this did not end the backing of the currency with gold, nor did it completely lift the restrictions placed upon the use of silver. - 106 -


The Worm in the Apple by Stephen Cook Before 1873, anyone who brought silver to the US Mint could have it turned into silver dollars for free but in 1873 that right had been removed. Now some silver was being allowed to flow back into the economy and contribute to a small increase in the money stock. However, the bankers were well satisfied with what they had achieved and loosened up on their lending. The depression eased and the economy moved gradually out of its post Civil War agony.

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The Worm in the Apple by Stephen Cook

ANOTHER DEAD PRESIDENT

Three years later Republican James Garfield was elected President. As a Congressman he had been chairman of the Appropriations Committee and a member of the Banking and Currency Committee and thus well understood how the economy was being manipulated. After his inauguration in 1871, he publicly attacked the bankers: "Whoever controls the volume of money in any country is absolute master of all industry and commerce...And when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate." Quite obviously Garfield had set out his stall to be no friend of the bankers. Considering the fate of Lincoln and the near fate of Jackson, this was a brave stand to take. But take it he did. A few weeks after making that statement, on July 2nd 1887, he too was assassinated. The financiers were gathering power very rapidly. They created a periodic "fleecing of the flock" as they called it - in other words booms and depressions so they could buy up bankrupt industry, farms and property at knock-down prices. In 1891 they were getting ready to take the American economy down yet again. An ABA memo laid out the strategy with mind-boggling clarity. The memo called upon the bankers to create a depression on a certain day 3 years in the future! "On September 1st, 1894, we will not renew our loans under any consideration. On September 1st we will demand our money. We will foreclose and become mortgagees in possession. We can take two thirds of the farms west of the Mississippi, and thousands of them east of the Mississippi as well, at our own price....Then the farmers will become tenants as in England...." It hardly needs pointing out that the sentiments herein expressed, in that they victimize honest, hardworking people and their dependents, using as weaponry control of money that was created by a flick of the pen, are the sentiments of an enemy. This is criminality, theft, corruption, extortion and plunder all rolled into one and then stripped naked of the social veneer that hides it from honest men. It is suppression of an entire people, a suppression so ugly that it sorely tests our ability to confront its evil. Yet confront it we must because its elimination lies in our hands and in our hands - 108 -


The Worm in the Apple by Stephen Cook only. These depressions were, as the late President Garfield had warned, a piece of cake to engineer by the handful of men who held the nation's purse strings, even down to naming the day on which they would begin. By 1896 the issue of more silver had become an issue of the presidential campaign, while the Seyd Act of 1873 had become known, quite rightly, as the Crime of 1873. Democrat William Jennings Bryant, a senator from Nebraska, ran for President on the free silver issue. At the democratic national Convention in Chicago he made an impassioned speech that concluded: "We will answer their demand for a gold standard by saying to them: 'you shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold." The bankers energetically supported the Republican candidate, McKinley, who favored the Gold Standard. The resulting presidential contest was fierce. Bryant delivered 600 speeches in 27 states while McKinley's side got the factory owners and industrialists among their supporters to tell their workers that if Bryant became President their plants would close and the workforce would be thrown out of work. It worked. McKinley was elected President by a small margin. Bryant ran for President again in 1900 and 1908 but each time was narrowly beaten. In 1912 the Democratic Party nominated Woodrow Wilson and Bryant was a powerful and influential supporter. When Wilson became President, he made Bryant Secretary of State, but Bryant soon became disillusioned with Wilson's Presidency and resigned after two years. Although he never became President, Bryant's formidable presence on the political scene and his ardent opposition to the international financiers' control over American money, delayed the bankers in their efforts to establish a central bank for many years.

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The Worm in the Apple by Stephen Cook TWENTIETH CENTURY - PUSH FOR CENTRAL BANK CONTINUES In the early 1900s men such as JP Morgan led the bankers' campaign for a central bank, the propaganda lie being that only a central bank could bring economic stability. J.P. Morgan was the most powerful US banker of the era, and as discussed earlier, along with Rockefeller, Harriman, Carnegie and others was greatly assisted by Rothschild "investment" in establishing his commercial empire. He was a Rothschild (England) confidant, maintained a residence in England and sailed there each summer. His father, Julius Morgan, had been America's financial agent to the British and after his death JP took on a British partner, Edward Grenfell, a director of the Bank of England. After his own death, it was revealed that Morgan's estate only amounted to a few million dollars; the bulk of his vast business empire was in fact owned by others. In 1902, incumbent President Theodore Roosevelt appeared to go after the vast monopolistic empires of Morgan and his friends using the Sherman anti-trust Act to break them up. In actual fact behind the appearance, Roosevelt did very little to interfere with the growing monopolization of US industries by bankers and their surrogates. For example, he supposedly broke up the Rockefeller Standard Oil monopoly but the reality was that it was simply divided into seven corporations all still owned and controlled by the Rockefellers. In 1907, the year following Roosevelt's re-election, Morgan hatched another plan for a central bank. Using their combined financial might Morgan and his friends worked in concert to crash the stock market and create a panic. Thousands of small banks all across America were already heavily over-exposed, having lent out paper money up to a hundred times the amount they held in gold in their reserves. In those days, along with the booms and depressions and general economic instability, bank runs were commonplace and now another massive bank run loomed as confidence nose-dived. Morgan heroically stepped in and offered to prop up the failing banks with his own money - or rather money he simply made out of nothing in the time-honoured fashion. His own bank printed up completely reserve-less notes to the value of $200 million and Congress let him do it! He then sent it to branch banks to loan out at interest. Soon, as money seemed to be plentiful, the public regained confidence. With the panic averted, Morgan was feted as a hero by the president of Princeton University: - 110 -


The Worm in the Apple by Stephen Cook

"All this trouble could be averted if we appointed a committee of six or seven public spirited men like JP Morgan to handle the affairs of our currency." That this naive notion sounds more like an oligarchy than a democracy is all the more surprising since the man who made the obsequious statement was none other than Woodrow Wilson. Morgan and friends must have really liked the cut of Wilson's jib because they really took him under their wing. With their patronage and backing he was himself elected President four years later, in 1912. Economic textbooks tend to suggest that the creation of the United States central bank in 1913, the Federal Reserve, was a direct result of the panic in 1907 and that this latest alarming epidemic of bank failures had left the entire nation fed up with the anarchy of the banking system and longing for centralized control that would bring stability. However Minnesota Congressman, Charles A Lindberg was closer to the mark when he later claimed that the panic of 1907 was nothing but a scam: "Those not favorable to the Money Trust could be squeezed out of business and the people frightened into demanding changes in the banking and currency laws which the Money Trust would frame." Since the passage of the National Bank Act of 1863, the money lenders had been able to engineer a series of booms and busts. The purpose of this was not only to "fleece the flock" but also to create a climate of such instability that to consolidate the banking system into a single central bank would appear the "only solution." In response to the 1907 panic engineered by Morgan and chums, Theodore Roosevelt set up the National Monetary Commission, to study the banking problem and make recommendations to Congress. The Commission was packed with Morgan's friends and cronies. Its chairman was Senator Nelson Aldrich from Rhode Island, who represented the Newport constituency of America's most wealthy banking dynasty. Aldrich's daughter married John D Rockefeller Junior and among their four sons was Nelson Rockefeller who became vice-president in 1974 to Gerald Ford, who himself had been vice-President to the disgraced Richard Nixon. Another son, David Rockefeller became head of the infamous Council on Foreign Relations and chairman of the Chase Manhattan Bank. As soon as the Monetary Commission was set up, Aldrich departed for a long tour of Europe at the taxpayers' expense where he "consulted" with central bankers in England, France and Germany. The cost of this trip to visit his banking pals? The American taxpayer picked up the tab for $300,000, a colossal sum equivalent to many millions of dollars today.

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The Worm in the Apple by Stephen Cook

JECKYLL ISLAND

Shortly after his return to the US in November 1910, some of the wealthiest and most powerful men in America gathered in a hotel on Jeckyll Island off the coast of Georgia. Among their number was Paul Warburg who had been dispatched by Rothschild to New York from Germany the previous year with the plans for a central banking system and received a $500,000 a year salary from the investment firm Kohn Loeb and Co to lobby Congress for a privately owned central bank. Warburg's partner in this firm was Jacob Schiff, grandson of the Schiff whose family had moved in with the Rothschilds back in Frankfurt in 1785. Jacob Schiff at that time was busy investing $20 million in the overthrow of the Tsar of Russia. The three European banking families, the Warburgs, Schiffs and Rothschilds had been as interconnected through marriage, alliances and mutual business interests down through the years, as had their protĂŠgĂŠs and counterparts in the US, the Rockefellers, Morgans and Aldriches. Years later Frank Vanderlip, President of the National Citibank of New York and a representative of the Rockefeller family, confirmed that the Jeckyll Island meeting had taken place in a February 1935 edition of the Saturday Evening Post. "I was as secretive - indeed, as furtive - as any conspirator. Discovery, we knew simply must not happen, or else all our time and effort would be wasted. If it were to be exposed that our particular group had got together and written a banking bill, that bill would have no chance whatever of passage by Congress." The conspirators had assembled to thrash out how to overcome their main problem: the reintroduction of a private central bank with themselves and their cronies as the main beneficiaries of its license to counterfeit money. However, they had other problems to contend with that must have cost them many sleepless nights, haunted by the specter of lost profits. The market share of the big national banks based mainly in New York was shrinking fast. So many banks had set up operations throughout the country that the number of US banks had more than doubled to over twenty thousand in the first ten years of the twentieth century. Only 29% of all banks were controlled by the big national banks and they held only 57% of the market share. That sort of thing would just not do. Free enterprise was fine but not when practiced by somebody else. Aldrich himself later admitted: "Before passage of this Act, the New York banks could only dominate the reserves of new York. Now, we are able to dominate the bank reserves of the entire country." - 112 -


The Worm in the Apple by Stephen Cook

Therefore, the conspirators needed to bring all these new independent banks under their control or their lives would simply not be worth living. As John D Rockefeller once put it: "Competition is sin." Unfortunately for them, the crash of 1907 notwithstanding, the American economy had in the past few years become so strong that corporations were starting to finance their own expansion from their profits rather than huge borrowing from the larger banks. In the first ten years of the twentieth century, 70% of corporate funding came from profits. In other words American Industry was starting to become independent of the money lenders and that simply could not be allowed. All those assembled on Jeckyll Island knew that all these problems would be resolved by getting a new central bank approved by Congress. But for public relations reasons it and the bill that would establish it had to have the right name in order to create the impression that the new institution was all about preventing bank runs and creating stability whilst concealing its real private-profit, monopolistic character. Preferably the word "bank" would not be used. After nine days the group dispersed, their plans agreed and their legislation drafted. The new central bank would be very similar to the old First and Second Banks of the United States. It would be given a complete monopoly over the currency of the US and create that money out of nothing. It was to be called the Federal Reserve. In case you were wondering how the US Federal Reserve creates money, here are the four essential steps: 1.) The Federal Open Market Committee approves the purchase of US bonds on the open market. US bonds are basically IOUs, pieces of paper drawn up by the government and assigned a value. The bonds are bought at that value and then at a future date, when the bond matures, are bought back by the government at that amount plus a certain % of interest. 2.) Bonds are bought by the Federal Reserve from whoever is offering them for sale on the open market, be that the government or some individual or institution that is in possession of bonds previously purchased from the government. 3.) The Federal Reserve pays for those bonds using money created out of nothing. Nowadays that is done by electronic credits, numbers entered into the account of the seller's bank. The seller's bank in turn credits the seller's bank account. These credits are based on nothing. They are just numbers. When an account is credited, no other account is debited the amount. 4.) The banks use these "deposits" as reserves. By fractional reserve lending they can then loan out to new borrowers ten times the amount credited, all at interest and again by simply entering numbers into an account without a corresponding amount being debited from any other account. - 113 -


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In this way, a Fed purchase of, say, $1 million gets turned into $10 million in other bank accounts. New money is created at each step. In effect, the Fed creates 10% of all new money and the other banks down the chain create the other 90%. This rapidly expands the amount of new money in the economy. It even more rapidly expands the amount of debt in the economy. To reduce the amount of money in circulation the Fed can simply reverse the process by selling the bonds it holds to the public. Each time the public buys a bond for, say, $1000, $1000 enters the bank's coffers and thus is removed from general circulation. However, that $1,000 is no longer in the buyer's bank account and as his bank was using that $1,000 as a reserve against which to lend $10,000, his bank now "has" $10,000 less that it can lend. In other words the Fed sale of a single bond of $1,000 becomes $11,000 less money in the economy. The new Federal Reserve bill was designed to cast in stone the bond-backed debtmoney system and to prevent the effective and much needed reform that would have resulted from allowing Lincoln's Greenback currency or similar debt-free money from making a come-back. It delivered to the bankers the right to create 90% of the country's money supply through fractional reserve lending and delivered control of that money supply into the hands of a few men - namely those who had drafted the legislation. But look at this: if money only comes into circulation through borrowing, that is borrowing by the productive citizenry, householders, farmers, entrepreneurs and so on, and if interest is charged on the money thus issued, that interest amounts to a toll or charge levied on people for the use of their own money. Take mortgage lending for example: mortgage payers carry the greatest burden of supplying money to the economy, and the interest one pays on one's mortgage throughout one's life is one's share of the toll charged for the privilege of having money in the economy! But most people earn their money, why should they pay a toll for having it? Well, basically because the money lenders have managed to have their scam enshrined in law.

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ANOTHER CENTRAL BANK? NOT YET....

The new bill established a central bank with a very high degree of independence from government control. In fact, with this system in place, control soon begins to work the other way. If governments are dependent on money lenders for the money supply; if they have to go back for more and more loans to keep the money supply at workable levels, ultimately for loans just to pay the interest on old loans; if the bank decides for whatever reason to cut back on its lending, the economy and thus the government are in serious trouble. Who is senior to whom in this arrangement? Once the conspirators left Jeckyll Island, there started a huge public relations blitz. The banks put together an "educational fund" of $5 million whose aim was to influence senior academics at respected Universities to back the plan for the central bank. Put it this way: a university professor who did not endorse the bank was not very likely to receive for his department a donation from the fund. Those who did, were. Among those who did was Woodrow Wilson. In fact he was one of the first to climb aboard the central bank bandwagon. As it happened, the ruse on that occasion did not work. The Aldrich Bill was soon identified for what it was: a bill designed to deliver power into the hands of what by then had come to be known as The Money Trust. Charles A Lindberg was among the opponents of the bill: "The Aldrich plan is the Wall Street plan. It means another panic, if necessary, to intimidate the people. Aldrich, paid by the government to represent the people, proposes a plan for the trusts instead." Aware they would not be able to muster the votes to win the issue in Congress, the Republican leadership decided to drop the bill rather than bring it to a vote and risk defeat. Down but not out, the bankers decided on a new approach: get themselves a friendly President. They began financing Woodrow Wilson's campaign for nomination as the Democratic Party candidate.

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A FRIENDLY PRESIDENT

According to respected historian James Parloff, Wall Street financier Bernard Baruch was put in charge of Wilson's indoctrination: "Baruch brought Wilson to the Democratic Party headquarters in New York in 1912, 'leading him like one would a poodle on a string.' Wilson received an 'indoctrination course' from the leaders convened there." When Wilson was elected President, the bankers were poised to have their central bank once more and to undo the damage done to them seventy years earlier by Andrew Jackson, which had only been partially repaired by the National Bank Act of the Civil War. Over those years the supporters of Jackson had become the supporters of Lincoln's Greenbacks and then the supporters of William Jennings Bryant. But Bryant's faction supported Wilson's nomination, unaware that behind Wilson were Baruch and the Money Trust. They were destined to be betrayed. During the Presidential campaign, the democrats in Wilson's camp were careful to pretend to oppose the Aldrich bill. Congressman Louis McFadden explains what happened then: "The Aldrich Bill was condemned in the platform....when Wilson was nominated..... The men who ruled the Democratic Party promised the people that if they were returned to power there would be no central bank established here while they had the reins of government. Thirteen months later that promise was broken, and the Wilson administration, under the tutelage of those sinister Wall Street figures..... established here in our free country the worm-eaten monarchical institution of the 'king bank' to control us from the top downward, and to saddle us from the cradle to the grave."

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THE REINCARNATION OF THE CENTRAL BANK

Once Wilson was elected, Morgan, Warburg, Baruch and company advanced the central bank idea once more, under the innocuous sounding name of “The Federal Reserve System.� The Democratic Party leadership backed the new plan as if it was something profoundly different from the Aldrich Bill, yet it was virtually identical in every important detail. Claims that the two bills were not the same thing were so vehement that Paul Warburg was forced to reassure his friends in Congress that they were indeed the same: "Brushing aside the external differences affecting the "shells", we find the "kernels" of the two systems very closely resembling and related to one another." That admission however, was on a "need to know" basis and not for public consumption. Cleverly, the Money Trust had Senator Aldridge and Frank Vanderlys - president of the Rockefeller National Citibank of New York and another Jeckyll Island conspirator - stand up and oppose the new bill. Many years later, Vanderlip was quoted in the Saturday Evening Post: "Although the Federal Reserve plan was defeated when it bore the name Aldrich, nevertheless its essential points were all contained in the plan that was finally adopted." As Congress debated the bill, they called Ohio Attorney Alfred Crozier to testify. Crozier reported: "The....bill grants just what Wall Street and the city banks for 25 years have been striving for - private instead of public control of currency. It [the new bill] does this as completely as the Aldrich Bill. Both measures rob the government and the people of all effective control over the public money, and invest in the banks exclusively the dangerous power to make money among the people scarce or plenty." During the debate on the bill, senators complained that the money powers were using their financial muscle to influence the outcome but that was nothing new. As it transpired the bill was finally sneaked through onto the statute books on a technicality. On December 22nd 1913, most Senators had left the Senate for the Christmas recess, having been assured that nothing further would be dome until after the Christmas. With only a handful of Senators remaining, the bill was voted into law. - 117 -


The Worm in the Apple by Stephen Cook Congressman Lindberg warned: "This Act establishes the most gigantic money trust on earth. When the President signs this bill, the invisible government by the Monetary Power will be legalized. The people may not know it immediately, but the day of reckoning is only a few years removed.....The worst legislative crime of the ages is perpetuated by this banking bill."

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USING THE PEOPLE AS COLLATERAL

As was the case with the Bank of England discussed earlier, money loaned to government by the central bank was advanced on the condition that interest payments were guaranteed by direct taxation of the people. As you have seen, the government borrows by selling bonds at such and such a price and then, after so many years when the bond matures, has to buy them back at such and such a price plus interest. In any one year a certain number of these bonds mature and become due for repayment. In Britain at present about ÂŁ30 billion worth of bonds has to be repaid each year. What is meant by interest in this case is the value of bonds that have matured and must be repaid. Fair enough, you might say. The borrowed money pays for services provided to the people so in effect the people are paying through their tax for the services provided. But look: the government borrows (say) $1 billion and uses it to provide $1 billion worth of services for the people. However, the people are taxed to pay not only for that $1 billion but also the interest, say $100 million. In other words, the taxpayer is constantly shelling out more than the value of the services he receives. In terms of services provided by the government the taxpayer never gets what he pays for. In 1895 the Supreme Court had declared a similar income tax unconstitutional and in 1909 had found a corporate income tax law unconstitutional as well. A Constitutional Amendment was therefore hustled through Congress allowing the new income tax law. This Amendment was sent to the state legislatures for approval, requiring three quarters of the states to ratify it before it became law. Many claim that the Amendment was never ratified by the required three quarters of the states and may not be legal. Nevertheless the Constitution was amended and in October 1913 Senator Aldrich got an income tax bill through Congress. However, the massive wealth of the likes of Rockefeller, Morgan, Carnegie et al needed protection from Income Tax system: so in 1913 the "Foundation Law" was also passed which allowed Rockefeller and Carnegie to pass that wealth onto the control of their offspring unmolested by tax laws they themselves had instigated. Any money donated to the Rockefeller Foundation, for instance became tax deductible. In other words, if any Rockefeller donated 1/2 of their per annum income to their own Foundation they could claim this as a deduction which "zeroed out" their income tax! When Nelson Rockefeller tried to run for the Presidency, in the sixties, he had to disclose his income tax return - which showed he paid only $680! A year after the passage of the Federal Reserve Act, Senator Lindberg said of the - 119 -


The Worm in the Apple by Stephen Cook newly installed system: "This is the strangest, most dangerous advantage ever placed in the hands of a special privilege class by any Government that ever existed. "The system is private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people's money. "They know in advance when to create panics for their advantage. They also know when to stop panic. Inflation and deflation work equally well for them when they control finance." Senator Lindberg's observations were spot on. He also observed that: "Already the Federal Reserve Bank have cornered the gold and gold certificates." Lindberg was far from alone in his disquiet over what had happened. Congressman Lewis McFadden, in a position to know because he was chairman of the House Banking and Currency Committee from 1920 to 1933, warned that the creation of the Fed had brought about: "A super-state controlled by international bankers and international industrialists acting together to enslave the world for their own pleasure." Again, spot on. Such statesmen not only saw through the whole ruse but were aware of consequences far into the future. Recent history, the current behavior of the United States and Britain on the international stage, the plight of the Third World and political and economic events begin to make sense when viewed in the light of Congressman McFadden's statement. His words were echoed by another chairman of the House Banking and Currency Committee around forty years later. In the 1960s Wright Patman, Congressman from Texas, observed: “In the United States today we have in effect two governments....we have the duly constituted government....Then we have an independent, uncontrolled and uncoordinated government in the federal reserve System, operating the money powers which are reserved to Congress by the Constitution." Even Thomas Edison, inventor of the light bulb, was alarmed by what was happening to his democracy: "If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good, makes the bill good also. The difference between the bond and the bill is the bond lets the brokers collect twice the amount of the bond and an additional 20%, but the currency pays nobody but those who contribute directly in some useful way. "It is absurd to say that our country can issue $30 million in bonds and not $30 - 120 -


The Worm in the Apple by Stephen Cook million in currency. Both are promises to pay, but one fattens the usurers and the other helps the people." Just three years after the passage of the Federal Reserve Act, even Woodrow Wilson himself was beginning to realise what he had done. "We have come to be the worst ruled, one of the most completely controlled governments in the civilized world - no longer a government of free opinion, no longer a government by...a vote of the majority, but a government by the opinion and duress of a small group of dominant men. "Some of the biggest men in the United States, in the field of commerce and manufacture, are afraid of something. They know that there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive, that they had better not speak its name above their breath when they speak in condemnation of it." And it appears that before he died in 1924, Wilson came to fully realise the enormity of what he had done: "I have unwittingly ruined my country." The major newspapers in the US, which the money men by that time also owned, not surprisingly eulogized over the 1913 Act as if it were a major breakthrough, claiming that now economic depression could be "scientifically prevented." The reality, born out by subsequent history, was that they could now be scientifically engineered. Very, very easily.

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AND NOW FOR A REALLY BIG WAR!

With economic power now very largely centrally controlled, not only in the United States, but Britain, France and many other countries, the time had arrived for the bankers to flex their muscles and make some serious money through the biggest war, and biggest debt-spinner, of all time: World War One, which started in Europe just one year after the US joined the central bank flock. It is true that nothing creates debt as fast and on such a scale as warfare and England at that time was the prime example. The Bank of England was 119 years old by the time of the Napoleonic Wars and in that relatively short period had managed to become embroiled in 56 years of warfare and preparations for war in much of the remaining 63. In World War One the bankers had a ball. The British Rothschilds loaned money to Britain, the French Rothschilds loaned money to France, the German Rothschilds loaned money to Germany, the same family in other words supporting both sides in the war. In the US, JP Morgan, the Rothschilds' associate, was busy selling war materials on behalf of US manufacturers to both the British and the French, doing business to the tune of $10 million a DAY, while many other American bankers did very nicely indeed out of the organized death, mutilation and mayhem. Bernard Baruch was appointed by Woodrow Wilson, still at that time unaware that he was aiding and abetting the biggest criminal operation in history, to head the War Industries Board. According to historian James Perloff, both Baruch and the Rockefellers made around $200 million from the war, while the manhood of many nations was bleeding to death on European battlefields. In the middle of all this, Russia suffered her revolution and the Tsar, head of the last European nation to stand firm against the central bank scheme, whose grandfather had aided Abraham Lincoln, whose country had vast oil resources and a growing oil industry that threatened Rockefeller's Standard Oil share of the market, was toppled. Money to assist the revolution had been supplied by financiers based in England, and by Jacob Schiff, the Rockefeller partner-in-crime who admitted on his death bed he had invested $20 million in the defeat of Tsar Nicholas, whilst Lenin was smuggled into Russia aboard a blacked-out train from Germany. But why would some of the richest men in the world financially back communism? Historian Gary Allen explains: "If one understands that socialism is not a share-the-wealth program, but is in reality a method to consolidate and control wealth, then the seeming paradox becomes no - 122 -


The Worm in the Apple by Stephen Cook paradox at all. Instead, it becomes logical, even the perfect tool of power-seeking megalomaniacs. "Communism, or more accurately, socialism, is not a movement of the downtrodden masses, but of the economic elite." And another historian, W Cleon Skausen in his 1970 book, The Naked Capitalist: "Power from any source tends to create an appetite for additional power....It was almost inevitable that the super-rich would one day aspire to control not only their own wealth, but the wealth of the whole world. "To achieve this they were perfectly willing to feed the ambitions of the power-hungry political conspirators who were committed to the overthrow of all existing governments and the establishment of a central world-wide dictatorship." Indeed, if one is a banker and wishes to help some revolutionary group topple a government, one is ideally placed to assist in that effort, not only through the channeling of funds but by the use of one's control of the money supply, either through a central bank or, if one does not exist, through the many city and regional banks, to sow the seeds of economic instability and chaos upon which revolutions feed.

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UNLEASHING MONSTERS

The problem with revolutionary groups is that they have their own agenda and tend to be difficult to control. But what happens if they get out of control and try to seize power from the very super-rich elite that aided and abetted them? The Wall Street and London financiers took a chance on the communists, feeding such revolutionary groups funds when they were compliant and withholding funds when they were not. Vladimir Illyich Lenin soon realised that although he was absolute dictator of the entire Russian Empire, he was not quite in control: "The state does not function as we desired. The car does not obey. A man is at the wheel and seems to lead it, but the car does not drive in the desired direction. It moves as another force wishes." Lewis T McFadden had the answer: "The course of Russian history has, indeed, been greatly affected by the operations of international bankers....The Soviet Government has been given United States Treasury funds by the Federal Reserve Board.....acting through the Chase Bank. "England has drawn money from us through the Federal Reserve banks and re-lent it at high rates of interest to the Soviet Government....The Dnieperstory Dam was built with funds unlawfully taken from the United States Treasury by the corrupt and dishonest Federal Reserve Board and the Federal Reserve Banks." All this help, of course, was feeding a rapacious monster that for seventy or so years fomented revolution, and turmoil across the globe, backed terrorism, enslaved and murdered millions of people and locked the entire plant into the Cold War. But in so doing, Communist Russia generated a heck of a lot of debt world-wide. In 1992, Boris Yeltsin was quoted in the Washington Times as complaining that most of the billions loaned to the USSR in foreign aid were not finding their way into the Russian economy at all but were winding up straight back in the coffers of western banks in payments on earlier debts. The unstable Communist experiment was finally killed off but Russia's un-repayable debts were not. The country continued to descend into economic chaos and, while the "Russian Mafia" was blamed for that vast nation's ills, the real mafia was still in place, milking the ailing cow to within an inch of its life. The colossal debts still had to be paid, the annual repayments coming from taxation. When the taxation of an impoverished people became such a burden that even major companies were not paying their taxes, western newspapers reported that the - 124 -


The Worm in the Apple by Stephen Cook Russian army was sending in troops to make the tax collections, in other words forcing people, businesses and even major gas companies to cough up at gun point!

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MEANWHILE, BACK AT THE FRONT....

But back to World War One. Millions died, Europe was torn apart and great nations laid low. Only the bankers emerged bright-eyed and bushy-tailed, their smart suits unruffled, from that misadventure. All the participant nations vastly expanded their national debts in an effort to win the good fight. The influences at work in any war are many and complex but if one really looks one finds in any such conflict the work of a third party, hidden from view, working on both sides to bring them into conflict. Behind World War One, one finds the Rothschilds and their fellow-travelers, "in good" with both sides, lending them vast oceans of money to build their war machines and sustain their war economies. The terrible irony is that such power could have been used for good. The bankers could have used their power over governments to stop the conflict before it got started. They could have withheld funds from both sides until they kissed and made up. Or even the threat of doing so would have done the trick. How long would it have taken Rothschild to whisper a friendly word of advice in some Prime Minister's ear? When World War One ended, the Paris Peace Conference saw the bankers embark upon their next objective: the further centralization and consolidation of power into a single World Government. Such proposals were given priority at the Peace Conference: the so-called League of Nations. The title sounded innocuous, even idealistic and inspiring to people tired of war. No doubt many idealists fell for it, but any trap, to be effective, has to have an alluring bait. Even slavery can be made to sound inviting if you call all the slaves of the same slave-master the League of Slaves. President Wilson, Paul Warburg and Bernard Baruch all attended the conference but soon discovered that nations were not yet weary or beaten down enough to surrender their sovereignty. The British Foreign Secretary called the League "a good joke" and President Wilson was humiliated when his own Congress refused to ratify the League. Without the input of US money, the whole concept died a premature death.

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STILL MORE DEAD PRESIDENTS

After World War One the American public dumped Wilson in favor of Republican Warren Harding, whom they elected to the White House in 1920 with over 60% of the vote. Harding was emphatically opposed to the League of Nations and to Bolshevism. His election heralded a run of 12 years of Republican Presidents and an era of unprecedented prosperity known as the Roaring Twenties. World War One had seen the US accrue a national debt ten times the debt from the Civil war, yet despite that the economy boomed. How? Well, for one thing gold had poured into the United States during World War One and continued to do so afterwards, enabling the economy to gain a little independence of the paper money monopolized by the banks and thus weakening the bankers' control. For another thing, after killing off the League of Nations, Harding moved quickly to reduce domestic taxes whilst raising tariffs on imports to record levels, a policy of which the Founding Fathers might have heartily approved and something from which modern government could learn. The US economy took off and production, sales and profits increased to such an extent that tax revenues still rose despite a reduction in taxation levels. In addition, under Harding and Coolidge, his vice-President who succeeded him and continued his good work, the Federal debt was cut by 38% down to $16 billion, the biggest percentage drop on record. Once more the bankers were faced with a serious threat to their power: the economy was gaining independence from them and Harding was setting such an example of sound economic management that other governments might copy it. But the bankers seemed to have the luck of the Devil in so far as Presidents they didn't like kept coming to premature and often sticky ends. Where Lincoln and Garfield had been struck down by the bullets from the guns of crazed "loners" and Jackson almost so, Harding's assassin was a mystery germ contracted on a train trip in his second year of office. No autopsy was carried out. The cause was said to be pneumonia or food poisoning - a strange display of medical inexactitude considering it was the United States President who had just been scythed down in his prime by the Grim Reaper. We shall never know what really killed a thoroughly capable statesman. Fortunately for America, Coolidge was also a thoroughly decent and capable statesman too and went on cutting taxes and restricting imports, letting producers - 127 -


The Worm in the Apple by Stephen Cook produce unshackled by suppressive levels of taxation and seeing no point in the country importing goods it was quite capable of producing itself. So the boom went on booming. It perhaps would have been asking too much of the bankers' incredible run of luck for it to kill off two Presidents in a row. But so far as the bankers were concerned, the prosperity had occurred without their permission and to add insult to injury was hitting their own profits because prosperous people don't need to borrow. That sort of shenanigans just would not do. It had to be stopped. As they had done in the past, the international bankers mobilized to crash the economy.

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CRASHING THE ECONOMY? PIECE OF CAKE!

The Federal Reserve began flooding the country with money, making credit cheap and easy enough to seduce people into borrowing. It increased the money supply by 62% in three years. Money was plentiful and the boom went into overdrive. Only now it was the boom before the bust. The healthy organism had been infected with cancerous cells. Before he died in 1919, Theodore Roosevelt warned the nation: "These International Bankers and Rockefeller-Standard Oil interests control the majority of newspapers and use the columns of these newspapers to club into submission or drive out of public office officials who refuse to do the bidding of the powerful corrupt cliques which comprise the invisible government." The Mayor of New York, John Hylan, concurred: "The warning of Theodore Roosevelt has much timeliness today, for the real menace of our republic is this invisible government which like an octopus sprawls its slimy length over city, state and nation.....It seizes in its long and powerful tentacles our executive officers, our legislative bodies, our schools, our courts, our newspapers and every agency created for the public protection.... "To depart from mere generalization, let me say that at the head of the octopus are the Rockefeller-Standard Oil interests and a small group of powerful banking houses generally referred to as the international bankers. The little coterie of powerful international bankers virtually run the United States government for their own selfish purposes. "They practically control both parties, write political platforms, make catspaws of party leaders, use the leading men of private organizations, and resort to every device to place in nomination for high public office only such candidates as will be amenable to the dictates of corrupt big business.... "These international bankers and Rockefeller-Standard Oil interests control the majority of newspapers and magazines in this country." As warnings go, these were about as strong as they come, from eminent politicians in a position to know what they were talking about. Yet no-one listened, or if they did, no-one took action. This was the Roaring Twenties, a time of unprecedented prosperity, and no-one wanted to worry too much about economics. But as John Burke once said: "For evil to triumph it is only necessary for good men to do nothing." America was soon to pay dearly for its failure to heed those warnings. - 129 -


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The prosperity had a cancer at the heart of it. As businesses expanded as never before, borrowing to finance the expansion, confident of profit margins that would accommodate repayments, they became increasingly strung out on credit. On the booming, confident stock market speculation became excessive. The bankers waited until the moment was right and then in April 1929, Paul Warburg sent out a secret message to his friends warning them that a stock market crash and a nationwide depression were immanent. In August the Federal Reserve began to tighten its lending, constricting the money supply. In October the big New York bankers called in their 24 hour broker call loans. Such loans, used to buy shares, had to be honoured as soon as they were called in. This meant that stockbrokers and their customers had to sell shares quickly to cover the loans - and without being too fussy as to what kind of a price they got for them. The sudden spate of selling caused a panic as cut-price shares began to be dumped on the market. Soon everyone was trying to dump their shares in an effort to get out quick before their price fell too low. This of course created a scramble to sell, which brought prices down, which created further selling, which caused prices to tumble - fast. The market crashed. However all the Wall Street giants of the era: JP Morgan, Joseph Kennedy, Bernard Baruch et al, had miraculously escaped harm in that by some bizarre coincidence they had all dumped their own shares and put their assets into cash or gold just before the crash. Phew! Congressman Louis McFadden accused the bankers of orchestrating the crash: "It was not an accident. It was a carefully contrived occurrence...The international bankers sought to bring about a condition of despair here so they might emerge as rulers of us all." In February 1931, in the midst of the ensuing Depression he also said: "I think it can hardly be disputed that the statesmen and financiers of Europe are ready to take almost any means to reacquire rapidly the gold stock which Europe lost to America as a result of World War One." Curtis Dahl, the son-in-law of Franklin D Roosevelt was a broker for Leman Brothers at the time and on the floor of the stock exchange on the day it crashed. In his 1970 book FDR - My Exploited Father-in-Law, he said: "Actually it was a calculated "shearing" of the public by the World Money Powers triggered by the sudden shortage of call money in the New York money market." In actual fact the stock market crash was just a blind. When stock markets crash, the - 130 -


The Worm in the Apple by Stephen Cook people who get hurt are the speculators, mainly the small to middle-size ones. Such crashes do not of themselves cause massive depressions. The real cause of the Depression was the planned contraction of the money supply orchestrated by the powers of the Federal Reserve. As Milton Friedman, NobelPrize-winning economist points out: "The Federal Reserve definitely caused the Great Depression by contracting the amount of money in circulation by one-third from 1929 to 1933." And a vast amount of wealth was most definitely redistributed. For example, Joseph Kennedy's wealth was $14 million in 1929 and by 1935, whilst the rest of America was on its uppers, had miraculously grown to $100 million. The funny thing about money, evidently, is that while it is definitely created, it is most certainly not destroyed. While the Crash and the depression saw to it that a great deal of it vanished from a great many pockets, it reappeared in rather fewer but greatly larger pockets. The brutality of what was done almost beggars belief. Throughout that period, whilst businesses crashed, families starved, farms went bankrupt and suited gentlemen threw themselves off Wall Street window ledges, the bankers of the Federal Reserve could at any time have ended the misery by loosening up on lending and allowing money to flow back into the economy. But they chose not to do so, chose to keep the screws turned tight. A controlled press meanwhile could have done a great service to millions of innocent people had it done its duty and told them the truth. But it did not. And bear in mind that while this was happening in America, the same thing was happening in England and Europe. Like puppets dancing on the same string the central banks were all tightening their lending, creating the very economic turmoil they purported to prevent.

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AND NOW IT GETS REALLY UGLY....

While the then President, Hoover, was desperately trying to prop up banks and save millions of his people from starvation in the midst of plentiful harvests, as unemployment swept a land whose wheels of industry had been turning merrily only moments before, while money was being sucked out of the American economy, much of that lost money was going abroad. Guess where! Well, let's let the venerable Congressman McFadden tell you. Eight years before Hitler was to invade Poland he said: "After World War One, Germany fell into the hands of the German international bankers. Those bankers bought her and they now own her lock, stock and barrel. They have purchased her industries, they have mortgages on her soil, they control her production, they control her public utilities. "The international German bankers have subsidized the present Government of Germany and they have also supplied every dollar of the money Adolph Hitler has used in his lavish campaign to build up a threat to the government of Bruening. "When Bruening fails to obey the orders of the Herman International bankers, Hitler is brought forth to scare the Germans into submission..... "Through the Federal Reserve Board....over $30 billions of American money.....has been pumped into Germany.....You have all heard of the spending that has taken place in Germany.....modernistic dwellings, her great planetariums, her gymnasiums, her swimming pools, her fine public highways, her perfect factories. All this was done on our money. All this was given to Germany through the Federal Reserve Board. "The Federal Reserve Board.....has pumped so many billions of dollars into Germany that they dare not name the total."

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The Worm in the Apple by Stephen Cook

THE GREAT GOLD ROBBERY

In 1932, whilst Germany was thriving on money stolen from the American economy, Franklin D Roosevelt was swept into the Presidency. He immediately enacted emergency "banking measures," which achieved nothing but to increase the Federal Reserve's power over the economy. Only then did the Fed begin to loosen the financial screws and allow new money to begin to feed into the starving economy. Later that year Roosevelt outlawed the private ownership of all gold coin and bullion. Most of the gold owned by the average American was in the form of coins and the decree was tantamount to a confiscation. Those who failed or refused to comply faced a year in prison and a ten thousand dollar fine - the equivalent of ten times that amount today. The decree, as you might expect, was not very popular. In fact it proved so unpopular that no-one in the government would admit authorizing it! No Congressman stepped forward and claimed it and FDR made it clear to everyone that he was not the author of it and even stated that he had not read it! That did not stop him signing it though, which seems a very loopy thing for a President to do. Mind you, he was not alone: the Secretary of the Treasury claimed not to have read it either and that it was "what the experts wanted." The American public might have been forgiven for wondering if they had just elected the Marx Brothers to the White House but FDR managed to convince them to hand over the loot by telling them that pooling the nation's resources was necessary to get America out of depression. The public was torn between hanging onto their wealth or obeying the government; they could smell a rat even when they could not quite see it. They did not trust FDR but on the other hand the penalties for non-compliance were pretty savage. In the end people obeyed the government, handed over their gold and received paper money for it, at $20.66 per ounce. To house the mountain of gold illegally confiscated from the people by their own government, a depository was set up near Louisville Kentucky, behind electrified fences, a moat and machine gun posts, presumably to discourage anyone from stealing it back again. It was called Fort Knox. And now for the rip-off to end all rip-offs. The gold was compulsorily purchased from the people by the government at $20.66 per ounce, using money borrowed from the Federal Reserve to buy it. Once all the gold had been turned in, the official price of gold was suddenly raised to $35 an ounce. - 133 -


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But the big guns of Wall Street had been using the millions they had made out of the Crash and the Depression to buy up as much gold as they could lay hands on, at the $20.66 per ounce price. They had shipped it to Europe and waited until the price was raised, then shipped it back and sold it to the government at the higher price, making an immediate profit of around $15 per ounce. But again, where does the government get the money to buy it? Why, from the only place money could come from: borrowed from the banks! In the US the Depression was finally ended the only way a government can, in a debt economy, solve the problem of debt: by going further into debt. FDR introduced his "New deal" which was in fact more of the same old deal: the government stimulated economic growth by creating bonds which it sold to the banks, which used money created out of thin air to buy them. If you think that is stupid, the British government went one better: it solved the problems caused by a constricted money supply by a policy of further restriction. With factories working half time, if at all, and unemployment at catastrophic levels with all the human misery that entails, His Majesty’s government, in its wisdom, went for higher interest rates, wage cuts and cuts in dole for the unemployed! So while America surged out of recession, Britain remained in depression right up to World War Two, whereupon the government, with a war to fight rather than a population to look after, decided it really didn't mind borrowing after all. Which brings us to the biggest debt producer yet: World War Two.

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....AND AN EVEN BIGGER WAR

Money squeezed out of the suffering American people was used by the Federal Reserve to finance Germany and ultimately the building of Hitler's war machine. But the involvement of the Wall Street giants and the Bank of England in Nazi Germany went further and nastier than that. From the 1920s The Rockefeller Foundation, for instance, poured money into Germany to finance a "medical" specialty known as psychiatric genetics. Psychiatric genetics is that branch of psychiatry which teaches that heredity establishes that some races are superior and "more worthy of life" than others. It was German psychiatry, led by men such as the infamous Ernst Rudin, that turned the concept of race purification into a pseudo science and which planned, championed and carried out the sterilization, then extermination of so-called inferior people in Germany, the definition of "inferior" at first encompassing the mentally handicapped and criminals but becoming gradually extended until it included entire races such as the Jews. The whole sick story of psychiatry's creation of the holocaust is beyond the scope of this book but in the years before Hitler, himself rendered stark staring bonkers by psychiatric "treatment," invaded Poland, the Rockefellers directed and financed the creation of the Kaiser Willhelm Institute for Psychiatry in Munich. This Institute, headed by Ernst Rudin played a leading role in the development of psychiatric genetics, both in theory and practice. Another contributor to the Institute was Paul Warburg's brother-in-law, James Loeb of the Kuhn Loeb banking family. The Warburgs were intimate partners of the Rockefellers. Rockefeller sponsorship of the Institute, to the tune of millions of dollars continued throughout the Hitler era. Whilst the Rockefellers and the Warburg-owned Kuhn Loeb bank were pouring funds into Nazi psychiatry and continued to do so right through the war and the holocaust, the Bank of England was also getting in on the act. Its then governor, occultist and psychiatric patient Montagu Norman, according to the Executive Intelligence Review of 7th October 1994: "...propped up Hitler's credit, arranged the armament of Germany, and guided the strategies of Hitler's powerful supporters, the Rockefellers, Warburgs and Harrimans." The same publication also goes on to report: - 135 -


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"The German chemical company IG Farben [supplier of Zylon B gas to the gas chambers] and Rockefeller's Standard Oil....were effectively a single firm, merged in hundreds of cartel arrangements. IG Farben was led, up until 1937 by the Warburg family, Rockefeller's partners in banking and in the design of Nazi German [race purification]." That relationship continued right through the war and even included Standard Oil funds helping to pay for the SS guards at Auschwitz, where the Kaiser Willhelm Institute assistant director, Joseph Mengele carried out his horrific experiments on human guinea pigs. The involvement of the Wall Street-London banking axis and its pet mass manipulation cult, psychiatry, in the creation and sustaining of Nazi Germany long enough for their deranged front-man Hitler to lay waste to Europe, is worthy of a whole study in itself but we hope from the instances mentioned that you have got the picture. As Napoleon said: "Money has no motherland; financiers are without patriotism and without decency; their sole object is gain." The whole point of World War Two, from the bankers' point of view was that it racked up debt: Hitler racked up debt to build his Reich then took the gold fillings from the corpses of Jews to pay it back before he collapsed; nations racked up debts fighting with or against him; the victors picked up the tab for rebuilding Europe once the war was over. And millions lay dead. In 1944 alone, the US spent $103 billion on the war. Its entire national income was only $183 billion. Every nation involved in the war greatly multiplied its National Debt: the US six-fold, Japan by 134%; France by 583%; Canada by 472%; Britain by 350%.

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POST WAR BOOM

After World War Two, Britain did not return immediately to its old restrictive economic policies. The post war boom occurred precisely because the government made no attempt to pay off its debt but let it go on rising. Added to this was finance from America but when these latter funds were eventually cut - while America's flow of money to the reconstruction of Germany continued - the government made no attempt to compensate for the lost funds by increasing its National Debt borrowing. In fact by the 1960s and right up to the present, the government returned to its old ways: high interest rates, attempts to cut the National Debt and so on. This drastic restriction of the money supply plunged the country into the rapid decline through which we have all been forced to live: escalating private and commercial debt, lost competitiveness at home and abroad, lost jobs, lost industries, lost hopes and lost confidence being the price we have all had to pay for attempts to cut the National Debt - attempts which failed. Although the rate at which the debt was increasing slowed slightly, it nevertheless went on climbing even though the country rendered itself almost destitute trying to pay it off. Today it stands at ÂŁ380 billion, more than half of all the money in circulation. But government unwillingness to borrow threw the burden of keeping up the money supply onto the shoulders of industry, the home-owner and private borrower. Private and commercial debt has escalated and now stands at around ÂŁ780 billion. As a result, it now takes both partners in a marriage to keep up with the mortgage and most families are creaking under the burden of debt as they attempt to maintain their standard of living. Notice too, that while the National Debt comprises around half the existing money supply, the British pay one way or another around half their income in tax. It has been said an Englishman works for the government for around half his working life. Perhaps it would be truer to say he works for the Bank of England for around half his working life. In the last year or so, as of this writing, the Bank of England has secured for itself a further slice of the power of life and death over the economy: the power to decide interest rates was handed over to it by the Blair government. Meanwhile, Britain's gold reserves are being sold by the Blair government under instructions from its creditors to the United States Federal Reserve - at about one third of their real market value. The government has said it will use the proceeds from this bargain basement gold sale to "invest in the Euro." What that means is it will use the money raised by selling off our gold reserves to prop up the ailing Euro and make it look good when it comes to convincing us all we would be better off with a single currency. - 137 -


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The single currency will be created out of thin air by the central European bank and loaned to member governments at interest. The bank will therefore control the economies of all the member nations. By now you know enough to understand what that means. But back to the US....

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GOLD? WHAT GOLD?

While we are on the subject of gold, what happened to the Fort Knox gold? Most Americans believe that their gold is still in safe-keeping in Fort Knox. At the end of World War Two, Fort Knox contained over 700 million ounces, over 70% of all the gold in the world. But no-one knows how much of it, if any, is still there behind the moat and the machine gun posts. Although the law requires an annual physical audit, no such audit of the Fort Knox gold has been done since President Eisenhower ordered one in 1953. The Treasury consistently refuses to do it. Is the Fort Knox gold still there? If not, where did it go? Graham Still, in the video documentary The Money Masters, says: "Over the years it was sold off to the European money changers at the $35 an ounce rate. This was during a time that it was illegal for Americans to buy their gold from Fort Knox. "By 1971 all the pure gold had been secretly removed from Fort Knox to London. Once that was done, President Nixon repealed Roosevelt's Gold Reserve Act of 1934, making it legal once more for Americans to buy their gold. "Naturally the price of gold immediately went through the roof. Nine years later, gold sold for ÂŁ880 an ounce, twenty five times what the gold in Fort Knox was purchased from the population for." It does not take a genius to work out how much richer anyone who had purchased gold at $35 an ounce would be. The story of the missing Fort Knox gold was not meant to get out. But it appeared in the New York Periodical in 1974. The article charged that the Rockefeller family was selling off gold held by the Fed to anonymous European buyers. The source was 59-year-old Louise Auchincloss Boyer, long-serving secretary to none other than Nelson Rockefeller, who became vice-President to Gerald Ford after the resignation of Nixon amid public scandal. Ms Boyer might have had more to tell us except that the gods that watch over bankers struck again and 32 days after the article appeared, she mysteriously "fell" to her death from the window of a tenth floor apartment. Wealthy Ohio business man Ed Dorell started his own investigation in order to uncover the truth, whatever it may be, of the Fort Knox gold. He pursued the case for fourteen years, spending a small fortune, writing thousands of letters to governments - 139 -


The Worm in the Apple by Stephen Cook and banking officials enquiring as to how much of the gold that was supposed to be in safekeeping in the national depository was a actually still there and where the rest had gone. He died without ever having gotten an answer to his question. In March 1975, in the New Hampshire Sunday News, Theodore Roosevelt's grand daughter, Edith Roosevelt, said: "Allegations of missing gold from our Fort Knox vaults are being widely discussed in European financial circles. But what is puzzling is that the administration is not hastening to demonstrate conclusively that there is no cause for concern over our gold treasure - if indeed it is in a position to do so." Certainly a full audit conducted in full public view would have been the logical step to calm public fears. It was never done. In 1981, when President Reagan took office, he appointed a "Gold Commission" to study the situation. In 1982 the Commission reported some shocking news: The United States owned no gold at all! All the gold left in Fort Knox, however much that might be, was owned by the Federal Reserve Bank and ultimately its investors, as collateral on the National Debt! Which makes that by far the biggest gold robbery in all history and as Britain now obligingly sells its gold to the Federal Reserve, one can only speculate as to exactly how much of the entire planet's gold reserves are now in the hands of a few wealthy criminals.

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A WORLD CENTRAL BANK

Towards the end of World War Two, the allies held a conference at Bretton Woods in the US at which they set up three new banking organizations which were to further consolidate and centralize the power of the banking elite over the nations of the world and determine the subsequent catastrophic development of the world economy. These were the Bank of International Settlements (BIS), the World Bank (WB) and International Monetary Fund (IMF). The purpose behind these new organizations was clear. Carroll Qigley, Professor at Georgetown University and President Clinton's mentor put it this way: "The powers of financial capitalism had [a] far-reaching [plan], 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 feudalistic fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. "The apex of the system was to be the Bank of 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 dominate its government by its ability to control treasury loans, to manipulate foreign exchanges, to influence the level of economic activity, and to influence cooperative politicians by subsequent economic rewards in the business world." In 1945, the League of Nations world government concept was revived and this time successfully put in place with full US cooperation. It was named the United Nations. But it is the banking organizations, with near total control over the currencies and thus the economies of the world's nations, where the covert power to influence world events lies. The World Bank and IMF simply duplicate on a world scale what the Bank of England established in the UK and the Federal Reserve in the US, the Bank of France, Bank of Germany, Bank of Russia, Finland, Brazil and so on and so on. Just as the Fed and the Bank of England are controlled by their respective Boards of Governors, the IMF and WB are controlled by their Boards of Governors. And these are comprised of the heads of the world's central banks or the heads of national treasury departments, which are dominated by their central banks. Voting power in - 141 -


The Worm in the Apple by Stephen Cook the IMF is rigged in such a way as to give the Fed and Bank of England effective control. The three world banking organizations: The IMF, WB, and BIS control the money supply of the entire world. Collectively they comprise a world central bank and duplicate the basic goldsmith's fraud, politely termed fractional reserve lending, on a planetary scale. As always the lender is senior to the borrower. The manufacture of money out of thin air that is borrowed by governments at interest to form an inherently un-repayable debt, delivers power into the hands of the World Central Bank. The WCB can control nations simply by expanding and contracting their credit, calling in loans, selling bonds or setting conditions for the rescheduling of loans. They constitute a banking cartel, owned and controlled by shadowy, unelected, private individuals that, through the central banks placed in each county, gradually assume the power to dictate economic policy to those nations. And when they determine your country's economic policy, they determine your standard of living, the quality of the food you buy, your wages, whether you will have a job or not, the information you receive through a heavily mortgaged press, the whole shape and quality of your life. Just as the Bank of England or the Fed issue currency out of thin air and lend it into the economy, so the IMF has been given the power to issue a world currency called Special Drawing Rights (SDRs). Well over $30 billion of these SDRs have been issued and member nations have been ordered to make them fully exchangeable with their own currencies. In 1988 the BIS put into effect regulations requiring the world's central banks to raise their reserves to 8% of liabilities by 1992. In other words, an upper limit was set to fractional reserve lending: what banks had in reserves must be no less than eight percent of their total lending. This meant that nations with low reserves, less than 8%, had to constrict credit, call in loans or sell stock to raise their reserve levels. This constriction of the money supply had the usual predictable effects: recession. Japan, whose economy had been one of the world's success stories - there is no denying the industry and productivity of the Japanese nation - was deeply affected by this restriction: she had had until 1988 one of the lowest capital reserve requirements in the world. She experienced in 1989 a crash which began almost as soon as the new regulations were put in place. Since 1990 around 50% of the value of her stock market and 60% of the value of her commercial real estate has been wiped out. There are several things about this example that are glaringly obvious. The first is that Japan is a highly organized, highly productive nation with a vigorous work ethic and a reputation for high quality goods, yet still she crashed. - 142 -


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What happened to her fiscally bore no relation to the observable, physical condition of her economy. In real terms: skills, workforce, plant, productivity levels, social stability, quality of product, world demand for product, product viability and so on she was a roaring powerhouse. None of that changed overnight, yet she crashed. What changed overnight was the policy of her central bank under instruction from the World Bank, a mere adjustment of numbers in a computer. The second thing is that the whole process completely bypasses government and the democratic process. Decisions are taken by a few unknown individuals who are not even Japanese and passed around through private institutions and the whole socioeconomic landscape changes. The desires and needs, hopes, wishes, preferences, goals or dreams of her people amounted to nothing, nothing at all.

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MONETARY TYRANNY

The IMF and WB bring us inevitably to the subject of Third World Debt. WB and IMF lending, suffice to say, has shoved the economies of many nations into a disastrous trend. It has saddled them with un-repayable loans; loans which they have rendered themselves utterly ruined trying to pay off. It has robbed them of control of their economic destinies: conditions attached to loans that cover the interest on earlier un-repayable loans have meant that the WCB now decides their policies, not their governments. Those policies have enforced an orientation of their economies towards exports, selling the wealth their people produce in order to pay off un-repayable loans. In the meantime the loans do not benefit the people of Third World countries: the people do not consume the wealth they produce; they go hungry or suffer the steady annihilation of the infrastructure, health care, education and even the environment of their country. Third World Debt is rigged to be un-repayable and to siphon off the wealth of nations and nations thus victimized are getting poorer very fast. The rhetoric about the alleviation of poverty is shown to be a downright lie because observably, painfully, shamefully the very opposite is happening. A radical transfer of power has rendered nations subservient to the global money powers. Although the Third World pays more and more to the banks, frequently unable to even cover the interest on its loans, the total indebtedness just goes on rising. The next time your TV screens show you emaciated Third World children scratching in the dust, remember that the cause of it is money created out of nothing by the stroke of a pen by a banker in some distant office and loaned to their government at interest. And remember too that all their governments could solve their economic problems tomorrow simply by creating their own currency instead of borrowing it.

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THOSE PRESIDENTS KEEP DROPPING LIKE FLIES...

In the United States in 1963 one final attempt to break loose of the central bankers was made by John F Kennedy. He signed Executive Order 11110 that returned to the elected US government the power to issue currency without having to borrow it from the Federal Reserve. Kennedy's order gave the US Treasury the power to "issue silver certificates against any silver bullion, silver or standard silver dollars in the treasury." In all Kennedy actually brought around $4.3 billion of debt free money into circulation. Just five months later, an assassin's bullet blew the back of his head off. No more debt free money was issued by the Treasury. His successor withdrew the debt free money in circulation. Had Kennedy lived, his actions might well have spelled the beginning of the end for the Federal Reserve and the banking scam world-wide. The bankers got lucky again. America has not been so fortunate. Her standard of living has steadily declined and almost all of her 6 trillion dollars of debt have accumulated since that time.

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CONCLUSIONS

This chapter has been an attempt to outline the inception and growth of the biggest fraud in history. I leave you to your own conclusions as to what this means for you and your loved ones, whether something should be done about it or not. In the following chapters, I will take a look at the impact of this fraud on the many different aspects of our lives, not least the dangerous decline in the quality of the food we eat, the destruction of our environment, depressions, economic decline, escalating debt and the great con of Monetary Union. My endeavor here has been to show you how it all came about and how that fraud grew and evolved until it enabled a handful of men factually and in the here and now to bypass elected government and exert control over millions for their own ends. The term Financial Dictatorship is neither exaggeration nor rhetoric: it is a statement of fact. It is real. It has the blood of millions on its hands and the unnecessary suffering and impoverishment of many millions more. It represents a clear and present danger to our freedoms, our health, safety and happiness and more importantly to those of our children. The money powers have always moved in the direction of consolidating power, of removing it further and further from the reach of people like you and I, to remove any possibility of discovery or, if it is discovered, of you or I being able to do anything about it. Inherently dishonest and corrupt, motivated by self protection and greed, it is bringing about the ruination of our civilization. Our civilization is worth saving; our world can be run better than this, our economies rendered the servants of our needs not the masters of our destinies and that there is no endeavor more in need of our attention nor more worthwhile than a shoulder to shoulder effort to put matters right. Just as a thief has no inherent right to steal or a murderer to kill, the bankers have no inherent right to their position of dominance: it has been stolen by a sleight of hand, a cowardly criminal deceit. Are we going to let them get away with it? Can we in the slightest afford to let this criminal operation continue?

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The Worm in the Apple

CHAPTER THREE

The Great Money Hoax

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INTRODUCTION It is the experience of most honest people that all manner of difficulties are put in their road: rising prices, extortionate taxes, inflation, debt, mortgages, meltdowns and mayhem. The economy penalizes honest production and rewards - and even elevates to high social status - all manner of parasites who don’t produce. In other words, it's a disorganized mess, the traps and barriers of which are often hard to see amid the complexity that passes for economics and the incomprehensible waffle that governments and the media spew out as “explanations” of why things aren’t running right. If one wishes to make something run better one has to first know the cause of it running badly so that one can remove that cause. At the risk of flogging to death the analogy I used earlier, imagine a car. It is a very fine, powerful car but it just won’t run. It coughs and splutters and dies. Try as one might one cannot work out what is wrong with it. One has the bonnet up; one checks everything from the carburettor to the fuel pump, from the state of the battery to whether there is any fuel in the tank. One changes the spark plugs and renews the cam belt and checks the timing. Yet still it won’t run. One sacks one’s mechanic and hires a new one and the new man goes over the thing with a fine tooth comb and winds up with a blank look on his face and a helpless shrug. So one sacks him and hires yet another mechanic who also fails to make the car go. So one dumps the car and buys a new one, a different model. But this one manifests the same problems and off we go again on a now familiar merry-go-round of frustrations. In the end perhaps one concludes in exasperation that “cars are just unreliable things” and that “mechanics are con merchants who don’t really know what they are doing.” None of which solves the problem, which we have now decided is beyond the wit of Man to resolve. What on Earth can be wrong with these ruddy cars? One gets even more basic than spark plugs and the state of the battery and one day checks the nature of the fuel itself. Now that’s well south of where we would expect the cause of the problem to lie. The nature of the fuel itself is above suspicion because “everybody knows” there’s gasoline in the tank. Of course there is! Yet, lo and behold, one discovers that the station where we buy the fuel has been selling us kerosene labelled as gasoline. So one buys one’s fuel elsewhere, makes sure it’s actually gasoline in the tank, cleans out the engine of the residues of counterfeit fuel and the car runs like a - 149 -


The Worm in the Apple by Stephen Cook dream. The problem with our spluttering, disaster-prone economy is just about that ridiculously basic - and in this chapter I am going to sketch out an explanation of that basic for you.

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SYMPTOMS

Most of our economic ills are a symptom of an underlying cause, the way a fever indicates the presence of a virus. If you have read the preceding chapters, you will by now have a good understand of what money is and how it is suppose to operate. You will also understand the history of the money hoax, how we have been taken for a ride and wound up in the needless economic mess we are in. You will have a good idea of just why we are forced to endure crippling taxation, widespread debt, unemployment, a crumbling economy, lost hopes and the disappearance of entire industries. Let us now look closer at the many consequences of running an economy on debt; let’s take apart the virus and really get to know its anatomy, for this basic understanding will further protect you from ever having the wool pulled over your eyes again.

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WHERE DOES MONEY COME FROM?

Most people assume that money gets into the economy because the government prints notes and mints coins and dishes them out in some way. But this is not what is happening. It is true that the government has notes and coins made and then spends them into the economy and this is perfectly fine and dandy. It is how money should be made and circulated and government merely needs to regulate its supply so that there is not too much or too little of it in circulation and its value remains as stable as possible. At the root of our economic problems, however, lies the startling truth that this sane, simple method of money creation only accounts for a tiny fraction (about 3%) of all the money in circulation. Almost all the nation's money - around 97% - isn't created by the government at all. It is created by private-profit corporations known as banks and it is then loaned to the economy at interest. There is a massive shortfall of the responsible supply of true money, which is bridged by the supply of money from another source, the banking sector. The supply of money by the banking sector comes with strings attached: the money is only loaned to the economy and interest is charged on the loan. Those strings completely sabotage the ability of that “money� to operate as true money should - as a support and facilitator of economic activity. In fact it becomes a serious hindrance to economic activity and will eventually destroy it.

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THE GREAT LENDING HOAX

Virtually all money enters the economy through bank lending, when a bank or similar money lending institution lends you, me, a business, a local council or the government money. When the borrower spends that borrowed money, it enters circulation. There are two main routes by which almost all money is currently supplied to the economy: 

by banks lending to individuals and companies



by banks lending to the government

The next question is an obvious one: from where does the bank get the money that it lends to people, businesses and government?

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MONEY FROM THIN AIR

The answer is somewhat less predictable. Get this: it does not come from anywhere. It does not exist until it is loaned. It is created out of thin air. That's right: when a bank lends money to you, me, a business or government, it creates new money out of nothing in order to lend it. How does a bank create money out of nothing? Simple. Let's imagine that Joe Citizen goes to the bank for a $5,000 loan. The bank ever so kindly - and with an air of taking a profound financial gamble on Joe's trustworthiness - agrees to make the loan. The figure $5,000 is credited to Joe's account and he can now spend that $5,000 in the economy by writing cheques against it. But when the bank credits Joe with $5,000 nobody else's account is debited! Tom, Dick or Harry do not receive a letter from the bank saying they cannot spend some of the money in their savings accounts because it has been loaned to Joe for a few years. It does not work that way at all, although people are allowed to assume that it does. All that actually happens is that the number $5,000 has been credited to Joe's account and that is all that has happened. That loan is nothing more than a ledger entry: nowadays, the changing of numbers in a computer's memory. All it takes is a click of computer keys and, hey presto, the bank has created $5,000 out of nothing.

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GIVE IT A FANCY NAME

This method of creating money out of nothing is given a fancy name: fractional reserve lending. Put simply, it is the notion that if the bank has, say, $1,000, in gold sitting in a vault somewhere, the law gives it the right to lend that $1,000 to many different borrowers at the same time. It can, simply through a process of making ledger entries, register a credit of $1,000 to Joe's account, a credit of $1,000 to Jim's account, a credit of $1,000 to Mike's account and so on. Each credit of $1,000 is backed up by that solitary $1,000 still sitting in its reserves. Nowadays it is even worse than that because banks are no longer required to have real gold sitting in a vault against which to lend: they can now lend against a ledger entry saying they have $1,000! The Banks can do this because as borrowers' accounts are credited with these loans no real, solid money such as notes and coins has to change hands: all that occurs is the adjusting of numbers in columns of figures: just that and nothing more. This is the way bank lending works: the creation out of thin air of new money as an interest-bearing loan. Most people, including the vast majority of innocent bank employees, bank executives and politicians are either unaware that this is what is happening or have not realised the terrible harm this is doing to their fellow man. Any economics text book for example will include a section that describes how banks create money in order to lend it. What they never do is explore the consequences of the process for the rest of us and the distortions this introduces. There is nothing wrong with us using electronic money provided people have confidence in it but as, I discussed in "What is Money?" new money must be supplied to the economy to facilitate exchange and as a service to the economy. It must not be loaned and certainly not at interest, which amounts to hiring out to us our own means of exchange and charging us a tax or toll for its use. And he who has the job of money creation must never, never, never have the right to use the money he creates for his own gain; otherwise he has access to all the wealth of the economy without having produced anything to earn it! Of course, banks do not simply create money and then spend it directly by buying country mansions and personal jets; that would be too obvious. Everybody would be able to see and understand what they were doing.

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The Worm in the Apple by Stephen Cook So a nice curve is entered in to obscure the basic scam. They don’t create money and spend it; they create money and lend it and then wait for the loans to be repaid before spending the proceeds. But ultimately it amounts to the same enormous unearned privilege.

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The Worm in the Apple by Stephen Cook

THE REALLY SINISTER BIT

So now you can see how sinister this is. Because that $5000 cited in our example is a loan, it has to be paid back at interest. When $5,000 is loaned to Joe, interest is added and Joe now owes (say) ÂŁ8,000. Joe pays that money back in time, through honest hard work and real wealth creation. As the loan is paid off, the original $5,000 created out of nothing to provide the loan returns to the bank, vanishes from circulation and is effectively cancelled out of existence again. However, the bank accounts the interest on the loan - $3,000 in our example - as its profit. This is not a bad return on the few minutes it takes to move around numbers in a computer, or the "risk" of lending money it did not have in the first place. Every time the bank creates and lends $5,000 out of nothing, it is at the same time because of the interest added - creating a debt of $8,000! In other words, debt is being created at a faster rate than money is being created. This practice has been going on for a very long time, during which time millions of such loan transactions have taken place, each one lending money into existence and adding it to the money stock - but each time adding an even greater debt to the economy's overall level of indebtedness. Although it creates the $5,000 to lend, the bank does not create the interest on the loan. The interest has to come from money already in circulation. As the debts are repaid, money is continually being removed from circulation, necessitating a further round of borrowing to replace it and with each round of borrowing siphoning, through interest payments, an increasing amount of existing money into ownership of the banks. As a result, we have long since passed the point where the bank-created debtmoney far exceeds the relatively tiny amount of money created as notes and coins by the government. In fact the overall debt far exceeds the total amount of money in circulation!

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The Worm in the Apple by Stephen Cook

UN-REPAYABLE DEBT

Let us simplify the numbers and imagine that the banks have created and lent to the economy a total money stock of $100 billion. To that total is added (say) 10% interest. We can see that the economy as a whole owes to the banks a total of $110 billion (loan plus interest). That $110 billion of debt is owed by businesses, individuals, mortgage holders, local authorities and central government. But as there is only $100 billion in existence, all the debt in the economy can never be paid off! This tells us two things: first, it is utterly impossible for all those debtors to clear their debts, even if $100 billion of debts were cleared there would have to remain ÂŁ10 billion of debts that cannot be cleared. Second, for the $100 billion of debts to be cleared, all the money in circulation would have to wind up in the possession of the banks and nobody else would have any money! How then is the economy supposed to honour its debts? How does it find the money to pay off the $10 billion interest on the debt, which does not exist? Clearly, as loans are being repaid the disappearing money has to be replaced; in other words, more money has to be created. How is it created? The banks create it out of thin air and lend it and, of course, as they do so create another debt which is greater than the total amount of money created and which therefore can never be paid off....except by borrowing more money into existence. Look at it another way; the bank creates $5,000 and lends it to Joe as per our above example. In time Joe has to pay that $5,000 back. But he also has to find $3, 000 interest from money already in existence - but as that $3,000 is only in the economy because it was created by an earlier round of lending and is already owed, it is now owed twice! If we total up all the private, commercial and government debt in the British economy, we find that well over a trillion pounds is owed. The total amount of money currently in circulation is roughly only half that amount. In the United States, the total debt is some $26 trillion against a total money stock of around $5 trillion. If we ever endeavoured to pay off all our debts to the lending institutions, all the money in the economy would disappear into a black hole and we would still owe massive debts. - 158 -


The Worm in the Apple by Stephen Cook And those remaining debts could not then be settled because there would be no money with which to settle them. The nation would be in default of its debts and the banks would have the right to seize the homes, farms and businesses on which the debts are secured - to the value of half a trillion pounds so far as Great Britain is concerned! It is very easy in the modern world to slide into debt and well nigh impossible to get out of it again. Well, now you know why.

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The Worm in the Apple by Stephen Cook

WHY ARE WE RUNNING OUT OF MONEY?

You have probably noticed that there is a worsening shortage of money at every level of the economy - a shortage increasingly bridged by borrowing. The rules of the present system we are using dictate that debt must exist if there is to be any money! Worse than that, not only must there be debt, the level of debt must continually increase merely to support economic activity at a certain level, not to mention permit economic growth. This is easy to see why if we simplify the figures again: Imagine an economy with £100 billion in circulation in it, which is just the right amount of money for the level of economic production and exchange that must be sustained. That £100 billion exists because someone - many someones - took out loans and mortgages and borrowed it into existence. But they did so at interest, let’s say 10% for the sake of simplicity. So the economy’s many borrowers together owe £110 billion in all and, in order to settle all the debts, more money must be removed from general circulation than was supplied to the economy by the round of borrowing that created it. That money must be replaced if the economy is not to be drained of money and thrown into massive recession and eventual ruin. It is replaced by further borrowing of new money into existence. In this next round of borrowing however £110 billion must be borrowed. But that too is borrowed at interest, meaning that £110 billion plus £11 billion must over time be removed from general circulation and flowed to the money lenders, a total of £121 billion. That £121 billion must also be replaced if the economy is not to be drained of money, so over a period of time £121 billion of new money must be created. It too is created by the mechanics of lending and must be repaid at interest. It is easy to see that even without expanding the economy, just keeping it at the same level, the volume of debt must continually escalate - forever. This of course is precisely what is happening to us and the reason why we experience an apparent money scarcity while debt levels everywhere are increasing. We are never told that there is no way debt can do anything but increase - because the only cure for the malaise is to cut out the cancer, the system of money creation - 160 -


The Worm in the Apple by Stephen Cook that enriches the world’s banks through the stream of interest payments on those debts. We are somehow made to feel it is our fault for "not being frugal enough" or some such thing. The mechanism I have described here is, in real life, made much more complex than my example and it is further obscured by the fact that all the outstanding debt does not have to be repaid at any one moment. It is staggered over sometimes long periods of time: money returning to the banking sector in a continuous stream from millions of borrowers, new money continually created in a continuous stream flowing to new borrowers. The net effect however is rather like a bucket with a hole in it: as fast as it is filled up it empties. Indeed as the hole gradually widens it empties faster than it can be filled up! And if you have to pay for the water you pour into the bucket at ever increasing speed, then your water bill will escalate at an accelerating rate as time goes by. As debt increases, more and more of the money in circulation is committed to servicing that debt through the weekly, monthly and annual instalments on loans, mortgages, overdrafts, credit cards and so forth. As you are no doubt well aware, money committed to servicing debt is money that cannot be used in any other way except to pay one's creditors. A man brings home £300 per week. He must pay the bank £100 per week on his mortgage and a further £30 per week on bank loans, credit cards, overdrafts and so on. Therefore total of £130 of his income cannot be spent on goods and services. Over time his debt levels increase and his repayments thereon rise to, say £40 per week, while a rise in interest rates increases his mortgage payments to £110 per week. He now has only £150 a week to spend on goods and services because he is flowing more money to the banking sector. He and the shops and so on where he spends his money are consequently worse off. So he demands a pay rise and the shops raise their prices so as to try to maintain living standards and avoid becoming and remaining poorer. And so we have what is referred as “inflation” - a phenomenon caused not by too much money chasing too few goods, the classic definition of inflation, but an over-supply of debt. Governments criticise workers for wanting more pay and businesses for putting up their prices, blaming it on greed! In other words they make the citizenry wrong for trying not to become poorer when the entire phenomenon results from government’s failure to do its job of money supply, having gifted to the banking sector the privilege of creating money for its own enrichment, no matter what the cost to the ordinary citizen! The cumulative effect of all this is a money shortage, a growing constriction of the stock of circulating money that is actually available to people to spend on goods and services. This accounts for the strange phenomenon of the economy appearing to be awash with money yet more and more people being unable to afford the goods and services that are available. A clear example of this is the escalation of mortgage borrowing with an ever greater slice of a household’s income being captured by the demands of servicing the mortgage. - 161 -


The Worm in the Apple by Stephen Cook

This constriction of spending power itself drives consumers into more borrowing so as to bridge the shortfall in their spending power. It creates a money shortage that is often misleadingly referred to as a "drop in demand," which suggests that somehow people have lost interest in buying the cars, washing machines, hair spray and selfassembly kitchen units they were only too happy to buy before. It is not in fact demand that has fallen at all but the consumer's ability to find enough tokens (unless he or she borrows them) with which to express his or her demand, a different thing entirely. As we continue to supply the economy with bogus money through this mechanism of bank lending, the banking sector accumulates vast riches through the raking in of interest, while the rest of us enable them to do so by sinking ever deeper into debt. It is the interest on outstanding debt that constitutes bank profits. The interest of the banks is not in people getting out of debt but in people, businesses and governments getting into debt...and staying there. There is hardly any true money in the economy at all - merely a vast surplus of debt, a counterfeit masquerading as money. This error is the reason our economy works erratically, is unstable and appears to be perpetually out of control, why when steered in one direction it promptly lurches in another, unexpected direction. Returning to the analogy of the spluttering car: we are using kerosene in the belief that we are using gasoline.

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The Worm in the Apple by Stephen Cook

POWER

This places a terrible power in the hands of the international banking cartels because they can control the fortunes of any economy - and thereby all the citizens of any nation - by regulating the money supply through granting or withholding loans. They can crash or boom any economy as they see fit and are at this very moment engaged in the process of doing just that. Through control of the money supply, the banking sector controls taxation levels, the cost of your home, and your car, the general condition of the economic environment in which you are trying to survive, your disposable income, the success or failure of your company and the general cost of living. Theoretically banks are merely private businesses providing a service to their customers, yet these private businesses have achieved without our consent a position of almost totalitarian power over our lives and over our governments, through their ability to manipulate money supply and, in essence, charge us a rental fee for the use of our own currency. It is a power that is not benignly exercised. For example, the bankers created the terrible Depression of the 1930s by refusing loans to businesses and farms while still demanding payment on existing loans. As a result money disappeared from circulation as loans were repaid but was not replaced by new lending. The money stock constricted. The factories, farms, roads, railways and workforce were still there, the goods and services were still available but economic activity ground to a halt and people, often literally, starved next to fields full of crops that were being burned because the crops could not be sold - because there was a shortage of money with which people could buy them. Yet that shortage of money just as suddenly vanished, enabling national economies to move into high gear, when World War Two needed to be financed. Suddenly there was no problem creating new money to lend to people to fight a war. It is said that World War Two ended the Great Depression but it would be more accurate to say that the bankers ended the Depression so that World War Two could be fought.

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The Worm in the Apple by Stephen Cook

CONTROLLING MONEY SUPPLY

In modern times, banks use a clumsy mechanism for controlling money supply: periodically raising and lowering interest rates. What on earth, you ask, do interest rates have to do with the amount of money in circulation? Interest rates can only be relevant to money supply if money is loaned into existence. Raising interest rates is used to slow down the rate at which people borrow new money into circulation by making it more expensive for them so to do. Higher interest rates increase the amount of their income that borrowers must commit to loan repayment. It thereby reduces the money people and businesses have with which to makes purchases in the economy, and increases the flow of money out of circulation, while making it harder to borrow new money into circulation to replace it. Consumer spending power is consequently reduced as money becomes scarcer and companies begin to experience difficulties selling their products due to the mythical "drop in demand". People have increased difficulty paying their mortgages, businesses go under, homes are forfeit and ultimately the money lenders are able to repossess the property and assets against which their loans of previously nonexistent money were secured. Lowering interest rates on the other hand is used to speed up the supply of new money borrowed into circulation. It makes money more plentiful by easing somewhat the costs to both consumer and industry of repaying mortgages and other loans. Essentially it is a lowering of the rental charge we must pay to banks for temporary use of the money they created out of thin air. People can then more easily be seduced into borrowing more money into existence because it is now, temporarily, "cheaper" so to do. However, when people are persuaded to borrow, they borrow up to the limits of the repayments they consider they can afford based on the interest rates being charged at the time and are unable to predict which way interest rates will "jump" in the future. But as sure as night follows day, interest rates are raised on one pretext or another, usually "just when things seemed to be getting better" and the nation is plunged into the money scarcity phase of the cycle. This an engineered boom-bust cycle, a periodic squeezing or easing off on the money supply through interest rates and bank policies on lending and there is nothing natural about it at all. Each time the country moves through its recession phase, homes, farms, businesses and assets can be seized by the money lenders, removing another slice of the - 164 -


The Worm in the Apple by Stephen Cook nation's wealth into the ownership or control of the international financiers who own the banking chains. If we trace the ownership of the banking chains back to source, we discover a wealthy international banking elite in possession of a global power to control money supply, answerable to no-one, creating nothing of benefit to Man and with no loyalties to the nations whose fortunes they can manipulate for their own gain.

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The Worm in the Apple by Stephen Cook

PLAYING GOD

Through this control of the debt-money supply, the international banking elite virtually plays God with the lives and fortunes of millions of the rest of us. They can boost any nation or business they favour and destroy any they don't. They can dictate the policies of the corporations, businesses, governments, political parties and media chains that are hopelessly indebted to them. The people and groups within the economy become increasingly dependent for their survival upon the willingness of the financial elite to continue extending credit. Moreover, as they control - indeed create - vast oceans of money, the financial elite can and do easily manipulate the values of currencies and their exchange rates, which in turn influences the relative abilities of nations to trade. Thus some nation such as Britain can be made to endure higher interest rates than its competitors or a currency so “strong” that its efforts to export are continually undermined. Vast pools of borrowed money slosh around the international money markets, directed by those who control them at some country that enjoys for a short while the boon of “inward investment” (lending) and then the crushing blow of “capital flight” when the money and the profits made on it are withdrawn for “investment” in some other “lucky” nation. All this makes for a massive instability of money supply and thus of economic fortunes that has nothing to do with the productiveness, honesty or worth of millions of people who must endure the periodic sweep of such man-made financial maelstroms across their national landscapes. The instability inherent in the system is hardly surprising for two reasons. First, almost all the money in circulation isn’t proper money at all. It is a counterfeit that looks like money and is called money but does not function or behave the way proper money should. Second, the creation of this bogus money upon which all economic life is now, God help us, dependent, is not in the hands of governments or accountable organizations but of private profit corporations who control and manipulate its supply for their own ends. In other words, money is not supplied to the economy for the purpose of facilitating exchange between producer and consumer but to satisfy the agendas of the money lenders, which is a different, false, purpose entirely. Times of instability such as wars or stock market crashes are highly desirable to the money powers because it is then that the greatest profits are made and the flow of wealth into their hands is most pronounced. - 166 -


The Worm in the Apple by Stephen Cook The effects of an unworkable money system and the machinations of an unscrupulous elite who manipulate it combine to undermine human endeavor in the direction of peace, prosperity and stability. Global civilization is consequently needlessly experiencing inordinate levels of turmoil and breakdown. There are no real beneficiaries of this system except the criminals who run it certainly not the ordinary people who create the wealth of nations. However, some nations are spared its worst excesses. Heavily indebted European nations and, the biggest debtor of them all, the US, are spared the destitution that is the lot of the Third World because their creditors do not impose upon them the same crippling conditions for the granting of loans. If they did, many people in those countries would starve, just as people are starving in the Third World right now. Lest people of the developed nations become complacent, they should reflect that the debt system is causing a global spread of poverty unprecedented in all history. If the cancer is poverty, then the virus is debt and the cancer is spreading. Even nations not regarded as part of the Third World are beginning to experience Third World conditions and are displaying growing pockets of decay and deprivation. This spread of poverty is occurring at a time when in terms of material reality, our technological capabilities to produce real goods and services we are becoming potentially wealthier! The problem is an organizational one, not a technological one. We can produce the food but if people don't have the money with which to buy the seeds or tractors with which to produce it or to buy the finished product when it is produced, they are going to starve in the midst of plenty. This situation is built into a debt-money system that is so inept it would be laughable were its consequences for millions not so vicious. This state of affairs will continue until Man bases his economic life upon a proper, sensible system of money issued as a support to the productive community rather than a get-rich-quick scam devised so that parasites can grab for themselves the wealth created by honest people.

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The Worm in the Apple by Stephen Cook

MIGHTY CORPORATIONS

The giant global corporations of the wealthy nations are intertwined in complex alliance with the money powers. Their dominance is easy to understand when one realizes that at the very apex of their pyramids of ownership and control and the apex of the corporate pyramids of the banking cartels one finds the same people, the same network of money dynasties, the aristocracy of international finance. The corporate giants are themselves built upon huge towers of credit; they thrive and grow and enjoy advantage from their easy access to credit granted on favourable terms. They bask in the gift of the global financial dictatorship that decides who will flourish and who will perish. Seizing control of a company is not that difficult when you have control of the debtmoney supply. As the corporate giants are, like everyone else, hopelessly in debt and dependent on the willingness of the banks to continue extending credit, not only can the banks dictate the policy of their debtors, but a refusal of credit will cause a company's shares on the stock market to fall in price. As the shares tumble, the bank is able to buy up the stock at knock-down prices and seize control of the company. When that is achieved, loans are then approved causing the stock to rise in value again. The stock is then sold by the bank at a huge profit, providing vastly more money to use the same trick again to buy up more stock at bargain basement prices. This is now so refined that an announcement in the press of a rise or fall in interest rates can send stocks up and down as the bankers wish. In this way stock markets can be manipulated and open or secret control of almost every large corporation can be achieved by an elite of international financiers. Once in control they can force those corporations to borrow huge sums from their banks and then, through interest on the loans, siphon off the company's earnings, leaving little or no actual profits from which dividends can be paid . The banks can reap huge benefits from interest payments on the loans, while leaving little reward for ordinary shareholders.

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The Worm in the Apple by Stephen Cook

THE BASIC MECHANISM

Each time we create money by having banks create it as interest-bearing loans, we simultaneously increase the overall indebtedness in the economy, while enriching the money lenders. In a debt economy, economic growth actually accelerates the plunge into debt. In contravention of our common-sense expectations of what should happen, the bigger and more productive the economy, the more deeply in debt it tends to be, the United States being a case in point. In order to further understand the devastating way this basic mechanism works, let us return to a simplified model again and this time imagine an economy that is trying to grow. Our imaginary economy as we take up our story, requires $100 billion circulating in it in order to function smoothly. That $100 billion ensures that it hums along comfortably with no money shortage that would make buying and selling difficult and thus cause recession and no over-supply that causes inflation and reduces the buying power of the dollar, with all its attendant ills of rising prices and wages and erosion of the value of people's savings. One day, through growth in population, improved production or new goods and services coming onto the market, there is an increase by 10% of the amount of goods and services being produced and offered up for exchange. The economy therefore requires a 10% increase in the money stock ($10 billion) in order to avoid a money shortage. At that point a sensible government would simply print a further $10 billion and spend it into the economy, say by paying for new roads, schools and hospitals, subsidies to industry to help further increase production or whatever the incumbent government's priorities are. This would not be inflationary because the new money would be absorbed by an increase in production. Moreover, that $10 billion would provide the government with additional revenue that did not have to be raised through taxes. However, instead of doing the sensible thing, the government decides not to create that $10 billion itself but have the banks create it and enter it into circulation by lending it to people, businesses or government. The distribution by lending of $10 billion of new money duly increases the amount of money in circulation to the desired new level of $110 billion. But the extra ten billion that was borrowed has to be paid back at, say, 10% interest. In other words, a total of $11 billion is now owed and when it is eventually paid back to the banks by those who borrowed it, the $11 billion repaid is removed from general circulation, leaving only $99 billion circulating. The bank cancels out the original loan and accounts the interest as profit: it is $1 billion richer than when it started and - 169 -


The Worm in the Apple by Stephen Cook everyone else is $1 billion poorer. To restore the money stock to the required $110 billion, the economy must now borrow $11 billion, which with 10% interest added means that $12.1 billion will then be owed to the banks. When that is paid off, $12.1 billion disappears from circulation. Interest on that repaid loan gives the bank another $1.1 billion of profit and the economy is now short of its target figure of $110 billion by $12.1 billion - there now being only $97.9 billion in circulation. $12.1 billion must now be borrowed to restore the money stock to £110 billion, incurring a total debt, when 10% interest is added, of $13.31 billion, which when it is paid off reduces the money stock to $96.69 billion. And so it goes on. When economies expand, as they do, they need to increase the money stock. Our imaginary economy might need to borrow $10 billion one year to get the money stock up to £110 billion but with economic growth it might need a money stock of $115 billion the next year, then $120 billion the year after that, necessitating the borrowing of far more than the above figures have assumed. This means an even steeper plunge into total debt and an even more rapid accumulation of bank wealth - wealth in exchange for which nothing of value has been produced. This is a one way flow: wealth flowing to the bank but debt, the opposite of wealth, flowing from it in return. The entire principle of exchange, the entire purpose of money, both indispensable foundations of civilization, are violated because goods and services are not being exchanged for goods and services. You can see from this simplified model that while the government refuses to create money itself but instead has the banking sector create it and lend it into circulation at interest, the only way to stop the increase in the general level of debt carried by the economy would be to cease all economic activity! If there is one thing an economy requires for its good health, it is money that is stable in value, in purchasing power. It is utter folly for government to permit instability in the value of the nation’s money. It is a cardinal sin to actively cause such instability. Any government that permits such an unnecessary and debilitating scam to be run on its people, to their immense cost and the immense profit of private banking cartels, must either be unforgivably stupid or, its heartfelt please to the contrary, working in the interests of those cartels, against the interests of the people it purports to serve. It is one or the other. Only government can tell you which - provided you can solicit from it an honest answer.

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The Worm in the Apple by Stephen Cook

RIDDLED WITH DEBT

The economy, as anyone can see if they look around them, has become riddled by debt, through bank loans, overdrafts, credit cards, business loans, government borrowing. Even share issues are another form of borrowing and it is no surprise that as industry is consumed by debt and inherent insolvency the global casinos of the stock markets, prospering parasitically upon the efforts of productive sectors, assume inordinate prominence. For money to exist in the economy, the economy must carry debt. That debt is not distributed evenly: different people and organisations carry differing portions of the whole. One person might owe a few thousand, another a mortgage of a few hundred thousand, a company or local authority might owe millions, and someone else (an increasing rarity) owe nothing at all. The inescapable truth however is that someone has to carry the debt. If one person reduces his debt by paying off some or all of what he owes, new debt must be created to replace the money taken out of circulation: in other words, for someone to improve their solvency, to avoid, reduce or get rid of debt, someone else must go further into debt! This is so much so that paying off a debt, clearing your overdraft or even receiving a wage packet or a lottery win cannot occur without someone else somewhere going deeper into debt! This is highly objectionable; our efforts to get along and prosper place us unwittingly in the position of trying to drive our fellows into debt. It is little wonder that the economic environment can feel vaguely threatening in ways we cannot quite define or instil in us an anxiety whose source we cannot quite see. The system is rigged to suppress honest men. This trap was neither made nor designed by men of good will but if they can achieve an understanding of it, they will know how to replace it with something more benign. This is the situation in which we find ourselves: people, companies and local and central government sliding deeper into debt as they carry their share of a debt burden that cannot do anything but increase. This sets up an intense competition among people that goes far beyond the reasonable competition to sell goods and services. It sets up in fact a desperate scramble for scarce money so as to avoid being the one who must carry the debt burden upon which the existence of money depends. - 171 -


The Worm in the Apple by Stephen Cook We all try hard to get out of debt or to avoid debt but the truth is that this is not possible for the majority of families, businesses and home owners. And it is becoming less possible by the day. The system demands an inexorable increase in borrowing so as to avoid money scarcity and recession. Built into it is the need for the increase of debt to accelerate, which it has been doing. The money lenders therefore must, if their system is somehow to keep going, find ways to persuade us to borrow more and more. Thus mortgage borrowing ratchets ever upwards, credit card borrowing takes off like a rocket, overdraft facilities mushroom. The banking sector itself becomes propelled into a mad scramble to keep us borrowing, with inducements and easy terms, credit card offers popping through the letterbox daily and “easy loan� adverts proliferating......and, of course, war or preparation for war, which is the most effective way of getting governments to borrow on a grand scale. You, meanwhile, are left with some illusion that debt is temporary, that debt will not go on inexorably mounting into the unlimited future, that poverty is not spreading, that a hopelessly mortgaged media is still "free;" that even though the mortgage is not cleared and the bank or building society possesses the deeds, you actually own the roof over your head. You are encouraged to believe that your elected government is in charge of your nation's affairs and that banking institutions are highly reputable organizations doing you a favour when they lend you money or "reluctantly" increase already exorbitant charges, so that you and your children will continue to pay from your earnings an ever greater tribute to them. Meanwhile, your nation crumbles, governments try to hide their powerlessness and hope for any kind of bright future steadily evaporates. And no-one comes clean and tells you why all this is happening to you.

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The Worm in the Apple by Stephen Cook

THE SUBLIME AND THE RIDICULOUS

How this system causes so many of us unnecessary pain becomes obvious when we take the above example and consider what would have happened if the government had simply created the extra money itself and spent it into the economy. The economy hums along at $100 billion as before. Economic growth for whatever reason creates a demand for an increase in the money stock by 10%. The government prints a further $10 billion in nice crisp new notes and spends it, say, on building a much needed new rail network somewhere. The $10 billion enters circulation as the government pays the contractors who build the new network and those contractors use it to pay wages, buy equipment and materials from suppliers and so on and the money thus circulates. The country now has a new rail network it badly needs, but no taxes had to be raised and no other services cut in order to finance it. People are put in work, reducing the dole queues and the tax burden through reduced social security payments. Those people will then go out and spend their wages on everything from after-shave to having the lounge painted and so the new money will circulate in the economy, stimulating new economic activity. No inflation has occurred because the government has been careful not to create more money than the economy actually required. Most importantly, no debt was created: that $10 billion entered circulation without anyone anywhere having to borrow. Compare these two methods of money supply, both of which involve the creation of new money out of nothing. On the one hand: the government grants the banks a mandate to create money out of nothing; the banks create that money and lend it to the government; the government spends the money on needed projects and so it enters circulation. Through taxation the government removes it from circulation again, plus an additional amount in interest, and pays it to the bank; the economy is now even shorter of money and recession looms, so the government borrows even more from the bank..... Alternatively, instead of borrowing directly, the government leaves it to you and I to solve the problem of money shortage by borrowing it ourselves, spending it, then at a later date paying it back plus interest, creating an even bigger problem of money shortage which we have to solve by even more borrowing.... On the other hand: the government creates the money itself; the government spends it into circulation and .....well, that's it.

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The Worm in the Apple by Stephen Cook

EUROPEAN UNION

The campaign for a single European super state exploits noble sentiments: the wish for co-operation among European peoples and an end to war. There is nothing at all wrong with those sentiments but any trap, to be effective, requires an alluring bait, otherwise people will not walk into it. The bait then is the noble “reasons” that are put forward for Union, that naturally appeal to men of good will. But the trap we are being persuaded to enter is well concealed and lies in the real agendum that is never openly declared. One is not opposed particularly to the idea of the unification of peoples. But European Union in its current form has a deceit built into it that, if not exposed, understood and rejected by people, is going to ruin them. In similar vein one is not, for instance, opposed to people selling other people time share apartments in Tenerife. It’s a splendid idea and I wouldn’t mind owning one myself. But what would be objectionable would be a bunch of shysters robbing people of their life savings by preying upon people’s belief or hope that they will own a time share in Tenerife. European Union in the form it is currently proposed means a single European currency controlled by a single European bank based in Frankfurt. It is in fact a move to consolidate and centralize banking power. When we realize the power that control of the money supply gives the small coterie of international financiers, we realize that what is being sought in the campaign for European Union is not a solution to our problems (which it has not, of course, delivered and those problems have gotten worse) but centralized, unaccountable and largely unseen power over all the once-free peoples of Europe. At this time probably only Britain, thanks to the instinctive reticence of its people, stands in the way of the financial elite consolidating their covert dictatorship. There can be no truly democratic vote by the people on this issue while they are obliged to base their decision on patchy, slanted, edited, incomplete or downright untrue “information” they receive from a media itself heavily indebted to creditors who have a massive vested interest in such a union. Those same powers that exercise financial leverage over the mainstream media can easily manipulate the economy as they wish. They can throw it into recession at any moment or crush, as they have done, industries targeted for elimination. The financial elite has a vested interest in Union being achieved come what may because its power will be centralized and strengthened. That the rabble must be - 174 -


The Worm in the Apple by Stephen Cook cajoled, duped or frightened into voting for the Promised Land is an inconvenience but not an insurmountable one. The financial elite can manipulate money supply and bring about conditions of such economic travail that a people will believe their efforts at productive nationhood are futile and vote for Union out of sheer desperation. Such a vote would be the absolutely worst thing a nation’s citizens could do because the way out of their economic troubles lies in reforming their money systems, not consolidating the very system that is the true source and cause of their difficulties. By all means let the peoples of Europe have union if they so decide but let them first have accurate information as to the real reasons their economies are failing and the correct solution to the problem. If then union should be the educated desire of the people, then let the currency of that union be created debt-free by its (democratic and open) government, not by its banking sector in the form of interest-bearing debt, whose will is enforced by a remote bureaucracy based on foreign soil. The current method of money creation sets the banking elite above government and above democratic accountability. Union, as currently so ardently propagandized, will solve none of our economic problems. It amounts to a stronger dose of the very medicine that is killing us and will set in concrete the debt-money banking fraud that wrecks the endeavor of millions of honest men to build a stable, decent civilization. It will remove even further from our grasp the chance to put things right. And that is the very reason it is being so heavily propagandised.

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SIMPLE SOLUTION IGNORED

Logically, any shortfall in spending power - a dysfunction in the distribution of the wealth created by our civilization - could be rectified by simply supplying the economy with the missing money. But how, in our modern economy, is this done? It is done by borrowing into existence more new money, either by the consumer or industry or by government itself. But why oh why, I hear you ask, does government not simply itself create and spend into circulation - debt free - the missing money through improved provision of services to the people rather than having usurers create it and force innocent people to carry debt in order to get it into circulation? Good question! Government would certainly save itself and all of us a great deal of grief if it did just that - and it is the simplest thing in the world to do. It is my hope that you will ask your government in no uncertain terms why on Earth it doesn't do this. The blunt truth is that it had better start doing so soon because unless it does, our economic decay will continue. One could be ever so “reasonable� about the intellects that occupy positions of governance and imagine that they are simply ill-advised or ignorant of the truth of the situation. But it is absolutely unforgivable of such people that they should allow themselves to be so ill-informed. The debt-based system is a criminal scam run for the benefit of an unimaginably wealthy elite and is currently pulling the economic rug from under the nations in whose interests governments purport to govern. It is sabotaging the efforts of generations of honest people who by sweat and perseverance labor to build a decent civilization for themselves and their children. But that government failure to correct this fatal flaw in our economies, given that it is so easy to do and would produce almost unimaginable benefits, is hard to explain in terms of mere stupidity. While governments disingenuously blame our economic slide into oblivion on this and that factor beyond their control or powers to predict - and often even blame us for "living beyond our means" or some such nonsense - the causes of the problem and their resolution are entirely, one hundred percent within government’s power to control. Moreover, while knowledge of the scam is not yet the property of the ordinary citizen, over a period of several centuries eminent men have attempted to alert our political elites to the problem and/or do something about it. - 176 -


The Worm in the Apple by Stephen Cook Among these were President Abraham Lincoln (assassinated) President James Garfield (assassinated) President John F Kennedy (assassinated) Congressman Louis T McFadden who died suddenly, Congressman Lindbergh and, in Britain, Lord Stamp (former Governor of the Bank of England) and CH Douglas in the 1930s whose popular campaign was making serious progress until it was interrupted by the bank-financed World War Two. Even as I write, many worthy men within the monetary reform movement are laboring in vain to persuade government to at least look this over before it is too late. What is happening here on the part of government is a wilful turning of many a blind eye. While the existing system is a tremendous boon and a most wonderful racket so far as a small financial elite are concerned, it is a recipe for ruin for almost everybody else. It is government's duty to serve all its people and an honest government worthy of our support would do just that. Such a government would take the route of the greatest good for the greatest number of its citizens and it most certainly would not aid and abet the shenanigans of a small money-grubbing clique of racketeers. Perhaps the citizenry then should cease electing people who pretend to serve them, while actually serving a small vested-interest group instead, and elect someone who will work for the greater good of all the people.

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INDUSTRY

In economic terms, a person or group performs two important roles: we perform the role of consumer when we buy something and producer when we produce something. For the sake of convenience, I shall refer to every producer large or small producing any type of goods or service for exchange with other people and groups under one term: industry. When industry produces goods or services it spends money in the process of production. Everyone engaged in producing anything - and this includes local and central government which produce various services for people and charge for them through taxation - incurs costs in the process of that production. So as not to lose money, industry must sell what it produces for at least as much as the total amount it spends making or providing it. If it receives from the sale of its products as much money as it spent in producing them, it breaks even. If it can receive from its customers more money than it spent, it makes a profit. Industry therefore seeks to charge for its products enough money at the very least to cover all its costs. Even government itself is a part of industry as I have defined industry when it, for instance, provides a hospital - although it is in the unique position of being able to force everyone (whether they use the service or not) to pay for it through taxation. The consumer uses money in his possession to buy industry's products. But where does a consumer's money come from? Well, in the form of wages, salaries, commissions, fees, dividend pay-outs, even wins at the dog track or dole handouts from government. In other words, through one avenue or another, from one source or another, in one form or another, the consumer's money comes from industry. Industry distributes to the consumer the money with which the consumer buys industry's goods. And here, in a debt economy, we have a serious problem: industry as a whole cannot possibly ever distribute to the consumer enough money for the consumer to be able to buy the goods and services industry produces at prices which cover the cost to industry of producing what is sold. Let's look at this closer, starting with this datum: the cost of everything you buy boils down to what must be paid to someone else for his labour in making, producing or providing something. Imagine you go to a shop and buy a light bulb. The cost of that light bulb is composed of what the people who produce the light bulb, transport the light bulb or - 178 -


The Worm in the Apple by Stephen Cook provide the shop that sells it to you want to receive for the part they play in making that light bulb available to you. The cost of making the light bulb in the first place involves what the people who make it want to receive for making it. The cost of the glass and filament that go into the light bulb is what the people who make the glass and filament want to receive for doing so. The cost of the raw materials used to make the various components amounts to what the people who mine the raw materials want to receive for mining them and even the cost of the machines used to mine the raw materials or the fuel used to run the machines is comprised of what the people who retrieve the oil from deep under the earth or who make the machines want to receive for so doing. And so on. There is no cost anywhere that does not derive from what one human being charges another. If industry distributes to the consumer the money the consumer needs to buy its goods, how does industry distribute that money? It distributes money by paying its wages and commissions, buying materials, buying fuel, paying its bills, hiring contractors and so on. In other words as it incurs and pays costs in running its operations and producing its products, it distributes money into the economy, money which ultimately by one route or another will wind up in the possession of some group or individual who, as a consumer, will buy products from industry! From this we can see that industry must distribute to the consumer sufficient money for the consumer to be able to buy its goods. Let us simplify again and imagine all of industry represented by a single manufacturer that produces in a one week period 9000 light bulbs. In so doing it spends a total of £9000 on fuel, materials, wages, insurance, electricity, transport, maintenance, tax, marketing, dividend payments to its shareholders, new plant and so on. To just break even it must consequently sell that produce for at least the total cost of producing it; that is, £9000 for 9000 bulbs. If it is to receive £9000 minimum from the consumer, it must have distributed £9000 minimum into the economy as it paid its bills and wages and so forth, so that the consumer can have the money to spend! Unfortunately this is impossible under the current system because some of industry's costs do not distribute money to the consumer. The light bulb company for example may have spent £9000 - its total costs producing its bulbs but if we imagine that £500 of those total costs were repayments on its past borrowing we immediately see we have trouble. That £500, in being repaid to the bank, vanishes from circulation and so does not wind up in the hands of the consumer! The light bulb company needs to distribute £9000 but in fact can only distribute £8500! Moreover, almost every consumer - be it an individual purchaser, a company or government department - also has debts in the form of loans, overdrafts and mortgages that he or she or it must pay to the bank. This means that of the £8500 - 179 -


The Worm in the Apple by Stephen Cook the light bulb company is able to distribute, some portion of it will also be spent on loan repayments. If we imagine that that portion is £2000, then the amount of money actually distributed to the consumer that the consumer is able to spend on industry’s products is a mere £6500, falling short of the £9000 industry needs to obtain from the consumer in order to break even! This is the worm in the apple, the flaw that cripples the economic system and undermines our efforts to organise the smooth production and distribution, through exchange, of wealth. There are hundreds of thousands of producers in the same position as our light bulb manufacturer, each one servicing debt of one kind or another as part of its overall costs. There are millions of consumers who flow a portion of the money they receive from industry in the form of wages and so forth to the banking sector and so cannot spend it. Debt, as we have seen is a crucial component of our money system, which is rigged so that escalating debt is built into it. Debt must be carried by industry and consumer and the more industrious we become, the more debt we must carry. There is a debt component to virtually every transaction we, as producer or consumer, make. Every time a bill is paid, an item purchased or indeed money changes hands, a portion of that money is earmarked not for use as the medium by which goods are exchanged but for a return to the banking sector that has a prior claim to it. There is a gap between the amount of money with which the consumer is able to bid for the goods and services industry offers up for sale on the one hand and on the other hand the money industry needs to obtain from the consumer for what it has produced. In fact it is not so much a gap as a chasm - a chasm that grows ever wider as debt pervades the economy. That chasm, the shortfall in consumer spending power is bridged by borrowing. The consumer has insufficient money to offer for industry’s goods, the money simply isn’t available. The solution is to enter more money into the system to make up the shortfall. But how is new money introduced into the economy? That’s right, by borrowing; the gap is bridged by borrowing. But that borrowing adds to the existing debt burden at a rate always faster than new money is created and therefore causes the aforementioned gap to widen, which necessitates further borrowing to bridge it, which widens the gap faster than it can be bridged....and so on. That shortfall in spending power, of produced goods that cannot be sold at viable prices, is distributed throughout the economy and some producer somewhere will have to carry a small or large portion of it. We have as a result producers in fierce competition with other producers to capture the consumer's perpetually inadequate spending power, all fighting to avoid being the ones who must carry the shortfall. If we look again at our light bulb manufacturer, we discover him embroiled in that - 180 -


The Worm in the Apple by Stephen Cook ferocious competition to capture scarce money, meet his costs and stay ahead of mounting debts. He does not want to become one of the producers who cannot make sufficient sales to cover his costs, but neither does any other producer: yet somebody is going to have to. Even if every product produced were vitally needed and wanted by the nation's consumers, they could not all be sold. Our manufacturer fights hard to sell his 9000 light bulbs. He is not just competing against other light bulb producers but against every other producer of every other product to capture money that is simply in too short supply for the consumer to be able to buy all the goods and services on offer. He invests heavily in promoting his product, in every imaginable hard-sell trick and gimmick to persuade, cajole and seduce the consumer to flow a portion of his inadequate spending power in his direction but the additional cost of intensifying his promotional effort considerably increases his overall costs. In fact, as is often the case with the modern economy, he begins to find it costs him more to promote and sell his product than to make it in the first place! That increased expenditure on marketing increases the distribution of money into the wider economy but here again a portion of it will return to the banking sector as the recipients of it service their debts and so not all of it will reach the consumer as spending power. The shortfall of consumer spending power is exacerbated, placing on the producer even greater pressure to market and sell. In other words, the more the producer markets, the more he will need to market in order to cover the costs of marketing! Thus we witness in the modern economy the phenomenon of marketing gone mad, an intense upward spiral of advertising, gimmicks, special offers, telesales, “free” gifts, mailings, “new” and “improved” versions of the same product, unscrupulous tricks and capers. The shortfall in consumer spending power means that all that is produced by industry cannot be sold and unsold goods are likely to stack up in industry's warehouses and, because what the consumer is able to pay tends to fall short of what industry needs to charge, the competition among producers is to cut prices down to a level where what is produced can be sold. The pressure however is to cut prices down below a level where the cost of production can be covered and profit margins on each product produced become slender or non-existent. This forces producers to seek ways to cut the cost of production. One way to cut costs is to cut the wages bill by mechanising and saving on labour. The problem with that is that, aside from depriving people of a livelihood, it also reduces the money distributed by the producer through wage packets, cutting overall consumer spending power further. Another way to cut costs and to accrue some kind of viable return on slender unit profits is to mass produce and use cheaper materials in the production process, to market and sell in bulk or to make other short-cuts on the quality of the product. - 181 -


The Worm in the Apple by Stephen Cook This makes for a market flooded with millions of identical, poor quality, less durable products made appealing by glossy packaging and slick marketing. But once again, as industry cuts costs, it reduces the spending power distributed to the consumer. The debt component of almost every transaction ensures that however much and by whatever means industry cuts costs, it cannot cut costs enough and is pressured to cut costs further. All this mass marketing and bulk production, the life or death struggle for market share and the pressure on industry to sell more and expand in order to stay ahead of rising debt-derived costs, makes for frantic debt-driven economic growth. This is growth not driven by human need but driven instead by the competition for scarce spending power against a background of mounting debt. The problem for producer and consumer alike is that this economic growth continually demands growth of the money stock but as that stock is created by someone taking on debt, every time new money is created, debt becomes an increasing component both of industry's costs and the consumer's income, and the gap between industry's prices and consumer spending power widens. This leads to even more goods unsold, an even larger shortfall, squeeze on profits, pressure to cut costs and make economies, to sell in more bulk and expand to stay ahead of debt. In fact, making a poorer quality product that is less durable and has to be replaced more often has now become an advantage in terms of volume of sales. Producers have difficulty selling all the products they produce and unsold goods tend to stack up. How can industry get people to keep coming back to buy more products more often? If, for example, light bulbs last only half as long before they simply have to be replaced, customers will buy from light bulb manufacturers twice as often as they did. That this requires the manufacturer to produce twice as many bulbs, consume twice as much of the Earth's resources, use twice as much energy and create twice as much pollution is not a problem the manufacturer, embroiled as he is in a life or death struggle for market share, is able to address, much as he - who must also breathe the air - would like to. This is but a step to built-in obsolescence as a way of preventing a build-up of unsold goods and obliging the consumer to return as frequently as possible to purchase more goods. Built-in obsolescence is achieved in two ways. The first is to simply build the product so that it or its essential components will fall apart or otherwise break down early - or to design a product as a disposable item that can be thrown away after a short period of use - and have to be replaced. The second is to create, through media campaigns and advertising, a climate of changing fashions. The consumer is persuaded to reject last year's model - colour logo - shape - "look" etc in favour of this year's fad. Although there is little difference between last year's version of a product and this year's "new, improved" but not very different (and changed at little added cost to the production process) variation, a new - 182 -


The Worm in the Apple by Stephen Cook round of buying by the consumer can hopefully be stimulated as last year's passĂŠ item threatens to stockpile unsold in industry's warehouses.

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COMMERCIAL WARFARE

As the home market cannot absorb all that industry produces, a solution to the problem is sought by seeking to sell products abroad; that is, invade someone else's home market and capture some of that market’s spending power. The pressure grows upon industry to export as it becomes increasingly unable to capture sufficient spending power in its home markets. Unfortunately every other country's economy has the same debt-derived problems and the same scarcity of spending power in their home markets because they too operate on the same money system. Industries in other countries are also trying to export in order to sell their unsold goods and capture spending power in foreign markets. Consequently the home market becomes invaded by products from abroad, further increasing the manufacturer's problems in selling his own products and intensifying the need to export, mechanize, make a cheaper product and so on. The debt basis of the money supply ensures that for any producer costs are creeping upwards: taxes, fuel bills, fees, costs of materials, vehicles, labour, insurance or what have you. They creep upwards because there is a debt component built into them and the debt component continually increases. Moreover, those who supply a producer are now supplying goods and components more cheaply made, designed to become quickly obsolete or whose lines are continually discontinued, in an effort to get him to spend more money and this too drives his costs upwards. Any one increase in the cost of parts, or fuel, or a tax rise, or a rise in interest rates, or insurance premiums, or a wage demand, or a consultation fee and so forth might not on its own be too much to worry about, but the aggregate impact of several or even many such increases can be considerable. And it is, naturally, passed on the consumer. The net result across the economy as a whole is that while mass production, intense marketing and poor durability are used to drive costs down, costs tend to increase in any case. The consumer consequently discovers that while he is now buying junk food, junk furniture, services cut to the bone and everything from cars to kettles that quickly deteriorate and have to be replaced, they nevertheless become increasingly inaccessible to him unless he borrows to cover the shortfall in his spending power. None of this is intended as a criticism of our scientific advance, our technical expertise, our ability to mechanise and remove much of the strain from human labour. In fact, the opportunities presented by our technical know-how should usher in an age of greater ease, of machines and tools used to produce well-made products turned out to a high standard and with optimum durability and due regard - 184 -


The Worm in the Apple by Stephen Cook for the environment. Yet the pressures of the debt-money system to a considerable degree diverts technology from a valid role and enslaves all that innovative ability, energy and ingenuity instead to the production of low quality junk, persuading the consumer to consume that junk and producing the same junk again and again. Technology has offset the worst effects of the debt economy in that it has enabled industry’s treadmill of debt-driven growth to turn ever more frantically without actually breaking up under the stresses.

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THE CONSUMER

The consumer, finding his spending power in decline, can attempt to rectify the situation in two ways. The first is to demand higher wages of industry. Although industry actually needs to distribute more spending power via wages, this adds to industry's costs and so drives up prices. The second is to bridge the shortfall by borrowing money. The consequence of increased borrowing is increased interest and loan repayments and these, as they bite, cut the consumer's disposable income further, remove from circulation more money than was borrowed into circulation to begin with, and necessitate further borrowing. Borrowing to buy, although it resolves a money shortage in the short term by enabling the consumer to spend, in effect, money he has not yet earned (in other words the consumer is borrowing from his own future income) creates a greater money shortage some time later when the borrower discovers that what he is now earning cannot be spent because he has already spent it in the past! Borrowing to buy also increases the cost to the consumer of any item so purchased. If one buys a car for cash it costs one, say, £15,000. If one borrows that £15,000 to purchase the car, when the loan plus interest is repaid it will have cost one around twice that sum. That is, the car has been purchased for £30,000 so far as the consumer is concerned (although the producer still only benefits to the tune of £15,000)! The consumer is in effect paying for the car twice over - once to the seller of the car and once to the banking sector. The first £15,000 pays for the car, the second £15,000 constitutes in effect a toll paid to the lender for the use of the first £15,000, which he created out of nothing. Paying the cost of the car twice over reduces the amount of money the consumer has available to spend on other purchases in an economy already creaking under the strain of inadequate spending power. This further intensifies industry's problems in selling its products.

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SUPPLY AND DEMAND DISRUPTED

It can be seen from this how the normal functioning of simple supply and demand (people as consumers need or want something so people as producers try to supply it) becomes disrupted. Money is the mechanism through which we express demand. We want, for instance a high quality, durable light bulb that lasts ten years and we offer a producer of light bulbs money for it. The producer needs to receive so much money for producing such a bulb - which he is perfectly capable of producing - but a high quality bulb requiring more labour to produce, better materials and so on comes at a high price. As we are trying to maintain (or raise) our standard of living, wishing to purchase many goods and many services that industry offers us but finding our spending power drifts shorter and shorter of being able to buy them, we have to make economies somewhere. We cannot offer the producer quite what he needs to be paid, so the producer endeavours to cut his prices (thus his costs and inevitably the quality of his product) in the hope that he can bring his price down to a level we can accommodate. The point here is we are not demanding cheap light bulbs, just as we are not demanding cheap mass-produced food laced with chemicals, furniture that falls apart, cars that rust, washing machines that break down, clothes that split at the seams, shoes that disintegrate or houses the size of shoe boxes. We want well made light bulbs but we cannot find enough money to express our demand for them. We can however express a demand for inferior quality products. From industry's point of view then, the demand, expressed by the amount of money the consumer is able to bid for its products, is for cheaper quality products There ensues a downward spiral in quality and durability of product in which the consumer and industry are in apparent accord. But it is an accord that derives from the distortions placed upon exchange by a system of counterfeit money. Money scarcity ensures the tendency for the consumer to “demand� cheap, inferior quality products. Money scarcity ensures that industry tends in the direction of cutting costs by producing cheap, inferior quality products.

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YOUR MORTGAGE ( from old French, gage = grip + mort = death. literally: death grip).

Have you ever wondered why for most people the effort to have a roof over their heads saddles them with a mortgage burden they must carry for most of their lives? Not only that, the debt burden that comes with having said roof over your head is getting bigger. The houses aren’t but the debt is. Understanding how the debt system of money creation works renders this easy to understand. Mortgage borrowing is the main route through which money is supplied to the economy - about sixty percent of all the money in circulation came into existence through mortgage borrowing. House buyers are carrying the major share of the burden of supplying the economy with money. Joe borrows, say, £70,000 to buy a house; he takes on a commitment to pay interest at a high rate over twenty five years on money created out of nothing. By and large he is committed to repaying at least double what he borrowed and God help him if he at any time over those 25 years falters in his efforts to pay because the lender can repossess his home even after years of Joe paying them money hand-over-fist! Joe, like any mortgage borrower, does not actually own the house until the mortgage and its massive interest are paid in full: the lender keeps possession of the deeds and essentially possession of the property until the last instalment of the mortgage and its interest are paid off. When we look this over we see that the "service" provided by the lender in exchange for this vast sum of money is meager indeed, particularly compared with the amount of production undertaken by Joe to honour his side of the bargain. A small amount of paperwork and a tap of computer keys sets up the deal and creates the money that is loaned and the lender's efforts thereafter largely involve chasing Joe for "their" money - money they did not actually have to begin with. They just put pen to paper and created it! The principle of a fair and equitable exchange of goods and services for goods and services - upon which healthy economies and civilisations with any life expectancy depend - is entirely violated. If your window cleaner charged you £150,000 for cleaning your windows you would think he was a crook, yet the banking institutions are considered to be highly respectable pillars of the community! None of this is illegal: current law empowers the banking system to operate in this parasitic way. Governments that purport to represent the citizens of the nation do nothing at all to protect them from this fraud. - 188 -


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SO MUCH FOR A HOME-OWNING DEMOCRACY!

A few years ago in Britain, people were persuaded that it was a good idea to "own their own home." Tens of thousands were persuaded to get on the property ladder and the lending institutions very obligingly created millions of pounds on their computers and loaned it at high rates of interest. The sudden surge of new money chasing relatively scarce housing pushed the prices of properties through the roof and of course as prices soared more mortgage borrowing was required. Young couples took on a lifetime of debt for the privilege of owning a centrally heated rabbit hutch and all the way up the property ladder people became increasingly indebted. And what happened when the population was nicely up to their ears in mortgage debt? The banks raised interest rates, putting a sharp squeeze on disposable incomes, plunging industry into recession and causing a devastating round of business failure and home and property repossession. If someone at the time had taken the trouble to explain how the system works and why all this was being done, rather than leaving everyone bewildered, heads might well have rolled because this whole scenario was nothing short of calculated criminal betrayal and an infliction of completely unnecessary pain. At this writing, house prices are sky-rocketing, putting homes beyond the pockets of ordinary people and making it increasingly hard for the young to get on the property ladder at all. When I say houses are beyond the pockets of ordinary people I mean they are waaaay beyond. Just look at how much the average person has to borrow and over how long a period just to own one of these consumer items! And it is getting worse. As house prices soar, the amount people must borrow in order to own one soars. In Japan, I believe, they have already introduced the “2nd Generation Mortgage� in which the term of the mortgage can extend beyond one lifetime and the kids inherit the mortgage undertaken by the parents. In Britain things are headed the same way as mortgage periods are being stretched longer and longer so as to keep the interest payments within the pockets of wage and salary earners. This is economics gone mad. It is also lovely for the money lenders. You’ll recall that the money lenders seek to have people in debt and paying interest, preferably forever. It is the stream of interest payments that constitutes their profits. It is however absolutely catastrophic for everybody else. What exactly is happening to the housing market? Houses just happen to be the largest consumer item and the least easy to afford, consequently the housing market - 190 -


The Worm in the Apple by Stephen Cook is the area where the money scarcity of the debt economy makes itself most keenly felt. It is the market that will most attract debt. The money shortage/debt phenomenon filters down through the broad economy to smaller consumer items and as the situation deteriorates these too begin to attract more and more debt: cars for example, mobile homes and so forth. Generally speaking, the bigger the consumer item the more debt it will attract. So, as the gap between the prices of produced goods (in this case houses) and incomes widens, borrowing moves in to “supply the missing money,” The increase in borrowing accelerates the widening of the gap and this necessitates more borrowing by more and more people. The contemporary scene is that here we have a market into which borrowed money is pumped by the lending institutions. A great deal of borrowed money is pumped into it. This is an inflationary situation: too much money chasing too few goods. In an inflationary situation, prices rise. The lenders are keen to lend, the economy requires ever more borrowing in order to stay out of recession so more and more borrowed money is poured into the market and consequently prices keep rising. Any restriction on that supply of borrowed money stalls or reverses the rise in prices as one would expect. There is however a limiting factor on how much money can be pumped into the market and that is how much the consumer can be persuaded to borrow. The consumer is understandably pretty desperate to own his own home and have a roof that keeps the rain off and the lenders can jiggle things about to keep ever-rising debt commitments just within range of his pay packet. The housing market could be stabilized simply by not pumping money into it with such gay abandon, by some sort of sensible policy on lending. But the lenders have to seduce us into debt and the system depends utterly upon debt levels increasing. When consumers become over-exposed and can no longer take on more debt or when they become unwilling to do so or when a rise in interest rates makes borrowing more expensive, the housing market cools off and prices either stabilize or fall. The cessation of the mad skyrocketing of house prices that obliges people to shoulder an ever increasing debt burden may seem like a good thing but even here there is a catch. Mortgage borrowing supplies the economy with money. When it constricts it constricts the supply of money to the economy. A constriction of money supply shoves the economy into recession. The problem with using such an unworkable system of money supply is that it is...well, unworkable. The problems caused by it will not resolve unless you address the money system itself. All you get instead is one failed “solution” after another, each one in turn becoming a new complexity of problem added to those that already exist - and the unabated decline in the health of the patient. The fact is, we are foolishly trying to make our economies run on the wrong fuel: debt. Cleaning the carburettor, kicking the tyres or adjusting the spark-gasp won’t make the car run any better. - 191 -


The Worm in the Apple by Stephen Cook

It doesn’t take a genius to see that this is not a sustainable system. The game played by the criminal clique running the scam has been to milk the money cow to within an inch of its life without actually killing it. Yet it is inevitable that its health will deteriorate. There is not a great deal of time left in which things can be put right. The fact is that outright ownership by people of the homes in which they live is at an all time low. The lenders retain the deeds to the property until the debt is paid and the size of the debt that must be paid before ownership becomes fact rather than merely nominal is at an all time high: the size of the average mortgage compared with the average income is now double what it was just a few years ago. We are not living in a home owning democracy at all: we are living in a debt owing financial dictatorship. The fact that the dictatorship is hidden from view makes in no less a reality.

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The Worm in the Apple by Stephen Cook

DEBT SLAVERY

The exposure of people to ever-increasing debt gradually moves them into a position of virtual slavery without their realizing it. Their freedom of choice and their freedom of economic manoeuvre are rather sneakily constricted. Anyone wishing to set up in business for example now finds it very difficult indeed to do so without borrowing. As soon as one borrows one has placed oneself in a position junior to the lender. He who lends money is always senior to he who needs to borrow it. Once one is in debt it is very difficult to get out of it again. Most businesses find their quest for true solvency elusive. Mortgage, loan, overdraft and credit card debts tend to increase. People who are tied to hefty mortgage repayments, loan instalments and credit card bills dare not risk being out of work, between jobs even for a second. They cannot take a temporary drop in income for some career move or new venture that might in the long term enable them to be happier or prosper beyond their current level. It is easy to imagine how much more freedom of movement and decision one would have if one were by and large free of debt. But most people can only dream. Today the average citizen carries a far larger burden of debt, a far larger obligation to pay what is essentially a regular tribute to a money-lending elite, than ever in history. The demands of debt servicing are pretty remorseless, the system is an unthinking and rather intimidating machine geared to extract regular tribute from the citizenry. It wants its money on time, week in and week out. It doesn’t exactly break your legs if you don’t pay but default on your mortgage and you lose your home, default on your debts and there are the bailiffs to take away your furniture and humiliate you in front of the neighbours and so forth. Anyone who has run into difficulty keeping up with their debts knows how intimidating the situation can be. A degree of intimidation is necessary to keep people paying their tribute to the banking elite, the tax levied for the use of money. On behalf of the money lending elite the state mobilizes debt collectors and bailiffs and laws and courts and confiscations and bankruptcies, the subtle machinery of threat that punishes the citizenry for doing what the system obliges them to do, what they must do if the economy is to run at all: borrow! The system in other words shackles increasing numbers of people in ever increasing degrees to the treadmill of debt. As the commitment of income to debt servicing grows as a proportion of total income, they are in effect obliged to spend larger and larger portions of their working lives in a kind of peonage in which they work for the enrichment of a non-producing leisure class, a money-lending aristocracy. If this process is permitted to continue and if government takes no steps to protect - 193 -


The Worm in the Apple by Stephen Cook the people from it, it will continue to move inexorably towards an end result of total ownership of all money and thus all wealth by the banking sector. It will result in the total, inextricable indebtedness of everyone else with all revenues and all incomes flowing to the banking sector. We can observe this process happening before our eyes and its mathematics are inescapable. This is what is going to happen unless we cease to put up with it and do something about it. There is another name for this sly process: subjugation. And another name for the end result that is being sought: slavery.

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The Worm in the Apple by Stephen Cook

WHY TAX US TO DEATH?

Government, local and national, is as adversely effected by the debt-money system as any other sector. The widening gap between industry’s prices and consumer spending power makes itself felt here also. As producers supplying services, governments and local authorities need to raise prices (taxes and tolls) in order to cover increasing costs but find the consumer increasingly unable to meet the prices they must charge. As consumers buying raw materials, stationery, computers, buildings, vehicles and the like, or hiring contractors and staff, they find their own spending power continually falls short of the prices they are being asked to pay. They follow the familiar pattern of trying to raise prices (taxes and tolls, car parking charges, fines etc) while making economies in production or quality of product (cuts in services, “reorganizations” and “economy drives”, privatisations etc). In raising prices they are however in the somewhat unique position of being able to forcibly extract from the consumer the price increases they require rather than rely on supply and demand. Try not paying your grossly inflated council tax for example and see what happens to you. In a debt economy, government experiences difficulty in balancing its books: most years the revenue it is able to raise through taxation of a people already burdened by a shortfall in spending power is insufficient to cover the costs of providing services and paying the interest on its past borrowing. The short-fall is referred to as the budget deficit. That budget deficit certainly afflicts central government but it works its way into and will be found in almost every branch of government: local authorities, police forces, health services and education, for example. Some may say, of course, that this inability to balance the books is simply the result of bad financial management. There may well be an element of this in many cases and certainly people are made to feel that this is the case – but every government, local authority, police force, health service and so forth on the planet? It seems unlikely and the most one could say about bad management, where it occurs, is that it exacerbates an underlying problem that has nothing to do with the skill or otherwise of managers. Management skill on the other hand, of which there is plenty in evidence, is a matter of somehow keeping things going at all despite the best efforts of the money powers to suck the life out of all human endeavour. Be that as it may, government that finds itself many billions short of the money it needs to cover all its costs has several options at its disposal: - 195 -


The Worm in the Apple by Stephen Cook

1.) It can simply print the money it requires and spend it into the economy. Governments across the world, however, currently refuse to take this logical option. The argument usually put forward is that it would be inflationary for government to simply print and spend money. Yet billions annually are being printed and spent into the economy through the mechanism of borrowing I have described and under that system we have rarely had anything but inflation! All government would be doing is taking money creation out of bank hands and getting money into circulation by spending it on needed projects as opposed to obliging all and sundry to carry debt! Instead of using the clumsy and punitive mechanism of interest rates to regulate how much new money is created, it would have to bring into play something quite rare for governments: judgment and responsibility. Government would merely need to monitor the growth or otherwise of the economy, particularly any changes in purchasing power of the currency and ensure that it released money in line with economic growth. That billions upon billions are borrowed into existence annually tells us emphatically that there is a dire shortage of money. The economy is simply crying out for money! Issuance of money debt-free by the government would reduce the pressure to borrow money into existence that is placed upon industry and the consumer. There would be “more money about,” less need therefore to borrow and therefore “less debt about.” But this is too simple and too easy on the citizenry for most governments to bear, apparently. 2.) It could take steps to ensure there is efficiency and no waste in the way it spends money in delivering its services. This is, of course, asking governments to change the habit of centuries but it would at least ensure the citizen got an improved exchange on the money that is levered steadfastly from his wallet. It would not however of itself handle the underlying problem. It would not matter how efficient, honest and near god-like in its wisdom government became in its expenditure of the hard-earned money we entrust to it, the tendency for there to exist a shortfall between what we pay and what we get would remain, so long as there remained a government debt. Imagine a government that spends £100 billion on services - and then rakes in £100 billion in taxes to pay for it. Of that £100 billion it must pay £10 billion to the banking sector to service the interest on its outstanding debt. This leaves government with £90 billion to spend on services that ran up costs of £100 billion. Looking at it from the perspective of the tax payer, he pays £100 billion but only receives £90 billion-worth (if government is efficient and scrupulously honest in serving the tax payer - a big “if.”) of services. Money is diverted out of general circulation into possession of the banking sector. So far as the rest of the economy is concerned, it’s disappeared into a big black hole. 3.) Have banks create more money and borrow it off them to cover the budget deficit. - 196 -


The Worm in the Apple by Stephen Cook This is money creation but, as we have seen, it also creates debt at a faster rate than it creates money, increases the size of the government’s already vast debt and simply ensures the interest payments will be bigger next time. 4.) Increase taxes. This is in essence hiking prices and forcing its rather disgruntled customers to pay them using threats, duress and punishment. It would enable government to “pay the bills it has incurred” but we can now see that the debt component ensures the tax payer will still not receive value for money. Moreover, an increase in taxation constricts disposable incomes and profits by cutting off income before it can be spent: that is, it reduces the spending power at the disposal of industry and consumer. This places pressure on industry to compensate by raising its prices, while reducing consumer ability to pay those prices. It tends to exacerbate the growing chasm between prices and consumer spending power. Any tax on incomes or business profits - particularly the most pernicious tax of all, income tax tends therefore to drive business and consumer into the welcoming arms of the money-lending sector. 5.) Cut costs by cutting back the services they provide. As we saw in our discussion of industry, efforts to cut costs inhibits the redistribution of spending power to the consumer. So it is with government: by buying less from suppliers, by paying less to contractors, by cutting the public sector wage bill and social security provision it constricts how much money flows back into the wider economy and into the pockets of consumers. This in turn constricts how much money is available to people and industry to pay the next round of taxes...and so forth. 6.) Some combination of 2, 3, 4 and 5. Most governments are currently trying to balance the books by some combination of 2, 3, 4 and 5: where the emphasis is placed depends upon the mandate and policies of a particular government. Many governments borrow heavily and run up the national debt, whose repayment can be left to future generations, in the form of everincreasing taxation. The United States is a case in point - her national debt is now well in excess of five trillion dollars, roughly the size of the country’s entire money stock. Some overtly or covertly raise taxation while overtly or covertly reducing the services they provide in exchange for their citizenry's hard-earned money. Great Britain is a good example of this approach. The sorry state of her affairs, the cynical mistrust of the British for their government and the shambles that has been made of her infrastructure and public services demonstrate very clearly that it is such a destructive policy only idiots or criminals would keep on doing it year after year. After all, if I and a growing army of people like me can figure this out, then so can the mighty intellects that have taken it upon themselves to manage the affairs of the nation. The willingness to tolerate such a chronic down-trend in the nation’s fortunes and the neglect of the obvious and straightforward remedial actions required to turn things around for the sake of furthering the entrenched privileges of an unproductive few is in my view a wilful betrayal of trust. - 197 -


The Worm in the Apple by Stephen Cook If the British elite find themselves increasingly reviled by the nation they have ruined, then they have only themselves to blame. The pity is that a disgruntled nation might become disillusioned with democracy and conclude that it “does not work.” I would contend that the only thing wrong with the democratic system at the moment is that it has been suborned by criminals. There is nothing much wrong with it that the attentions of honest and well-intentioned men could not cure. The needless sacrifice enforced upon the long-suffering British by this pretended “doing something about it” has utterly failed to prevent the government’s plunge into debt. By the turn of the millennium, Britain’s national debt had multiplied to over twenty times what it had been at the mid-point of the twentieth century. Governments that are content to run up their national debts are able, to some degree, to keep taxes lower and avoid the erosion of services that so plagues the British economy. If we take a close look at the basic mechanism of government borrowing, using a simplified model, we see that government, along with everyone else, is in a no-win situation.

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The Worm in the Apple by Stephen Cook

GOVERNMENT BORROWING

Imagine a government that borrows £30 billion one year in order to cover a £30 billion budget deficit. That loan is repaid at, say, 10% interest. In other words, the total cost of paying it off is going to be £33 billion; this is money the government is going to have to take from tax revenues. Even if other costs do not rise and taxes are not increased, this will increase its budget deficit from £30 billion to £33 billion. So it borrows £33 billion and later has to honour that debt at 10% interest, a total of £36.3 billion, making its budget deficit even larger and requiring even more borrowing to cover it. In reality a welter of complexity sufficient to make one’s head spin hides it from view but this is the essence of the matter, the basic mechanism by which the national debt ratchets upwards at an alarming rate year in and year out. Britain's stood at £26 billion in 1960, £90 billion in 1980 and a staggering £380 billion in 1996. It is predicted to top one trillion pounds in the next ten or so years!

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The Worm in the Apple by Stephen Cook

TAXES AND MORE TAXES

When we talk about government paying off its debt, what we mean in reality is that you, the tax payer, carry the burden. The income tax is probably the most pernicious and suppressive of all taxes, a disincentive to produce, justly hated by the productive population, complex and expensive to administer and collect. It cuts off income before it can be spent and so drives people and businesses into the arms of the money lenders. If you want to destroy a prosperous, productive civilization, then suborn its government and get it to implement an income tax! People have lived with - or in spite of - income tax for so long it has become a fixture whose necessity or usefulness is rarely questioned, yet it is probably the worst way of generating government revenue ever dreamed up by gormless bureaucrats. It simply is not necessary: the only useful purpose it serves is to secure government loans against the productive endeavour of the citizenry. While we are looking at taxes, however, it is worth discussing just how much we are really taxed. The British for example, one of the most heavily taxed nations in history, on average pay over half of what they earn to their beloved tax collector. Each year the government rakes in around half the entire money stock in various overt or hidden taxes and this is a tremendous burden placed upon the productive population, particularly as the return provided by government in terms of anything that truly helps, as opposed to hinders, their efforts to survive is paltry at best. Many countries operate a “sliding scale” of income tax and this is erroneously deemed to be “more fair.” When we look at this more closely, we discover that it is actually a mechanism for sneakily impoverishing the citizen. This can be best illustrated by a simplified example. Let’s imagine that on incomes up to £200 per week, income tax is levied at 25% so that a worker on £200 per week will pay £50 income tax to the government. Between £200 and £1000 per week it is levied at, say, 40% so a worker on £800 a week pays £50 on his first £200, plus another £240 (40%) on his next £600 of earnings. Above $1000 a week let’s imagine income tax is levied at 90%. A person who earns, say, £1200 per week will then pay £50 on his first £200, £320 on his next £800 and £180 on his next £200. - 200 -


The Worm in the Apple by Stephen Cook

This doesn’t look so bad until we realize that inflation, or rather the steady erosion of spending power that occurs in the debt economy, tends to push up prices and incomes. People’s incomes rise; they don’t get any richer because money is losing purchasing power - everything they buy is getting more expensive - but the numerical value of their pay packet increases. Someone on £190 per week for example, and paying tax on his earnings at 25%, gets a pay rise to £230 per week to keep pace with the rise in the cost of living. But now, on £30 of his earnings he is paying tax at 40% because he has moved into the higher tax bracket. His pay packet has the same purchasing power but a bigger slice of it is taken in tax. He is therefore to that degree poorer. If we consider this in terms of hours of work we can see more clearly what is happening. Joe is on £200 per week and just within the 25% tax bracket. He works 40 hours a week at £5 per hour and so, as he pays £50 in income tax, he is in effect taxed to the value of 10 hours of his labour. But then he increases his income for some reason to, say, £400 per week. He still works 40 hours (£10 per hour) but now his first £200 is taxed at 25% (5 hours of labor) and the remaining £200 of his income at 40%, which is £80 (8 hours of work) which means the total tax he pays amounts to £130 - 13 hours of his work. In other words, as inflation pushes up nominal incomes, people tend to move up into higher tax brackets and as they do so they get poorer and wind up spending a greater portion of their time working for the government instead of themselves or their employer! This is of course a massive penalty placed upon what should be rewarded: self improvement, ambition, industriousness and so forth. This system further penalizes people via the inflation that erodes spending power of their savings and their pay packets. One wonders how many more ways governments are going to find to knock their honest citizens about and how long before they realise the patently obvious: the civilization rests on the shoulders of the honest citizen; the honest citizen is the one who makes it run and keeps it going; if you kill him off through an overwhelm of economic duress, you will not in the end have anything to govern! You dopes! Governments seldom do things that aren’t inflationary and indeed they protect a criminal system that has inflation built into it. A sliding scale of income tax liability actually makes inflation advantageous in the distorted logic of governments and other mad operations. It causes incomes to drift up into higher brackets and enables government to collect increased tax revenues without overtly “putting up taxes.” It’s yet another chapter from the ruling elite’s “How to Fleece the Citizen” handbook. - 201 -


The Worm in the Apple by Stephen Cook Government finds all kinds of ruses for increasing taxation without the victims realising it. It struggles desperately to mask what it is doing for fear the citizen might become uppity if he realized the full extent to which he is paying through the nose for its shabby dis-services. The income tax is perhaps the biggest con but two others are worth a mention because they illustrate just how sneaky things can get. The first is shedding public services that were being financed from the public purse, privatising them and making the public pay for them on a commercial basis but not reflecting the savings in government expenditure in a tax reduction. The second is one is covert taxation, exemplified by a ruse that is currently being pulled on the British. Everybody is given to believe that the county’s emergency services, ambulances and so forth, are financed from the public purse. In the case of road accidents however, the emergency services bill the insurance of the drivers involved. The cost of fire and ambulance attendance at road accidents is therefore borne by the motorist through higher motoring insurance premiums. Higher insurance premiums become thereby a covert additional tax. As if these were not bad enough impositions upon the citizen, it is seldom recognised that the honest man actually pays two other, hidden, taxes. The first is the interest he pays on his borrowing. Given that we are obliged to borrow money so that money can exist and then pay interest for the privilege, the interest charged by the lending institutions constitutes a toll or tax that we pay for the use of money! That the revenue does not accrue to government and so cannot be used by government for the provision of services that are of use to people and that it accrues instead to private profit corporations makes it no less a tax. The second hidden tax is inflation itself: inflation is a covert taxation of the people. In an inflationary situation where money is constantly losing value, it is worth more in terms of what it will buy at the point of issue, than later when spent by the citizen. Let’s imagine that £100 of new money is created, whether by government or by banks who then lend it to government. When it is first spent by government, say to pay a printer for services rendered, that £100 will buy (say) 100 loaves of bread. In effect then the government pays the printer £100, which represent 100 loaves of bread and the printer supplies a stack of forms in exchange that are worth £100 or 100 loaves of bread. But by the time the printer spends that 100 it has lost value. For the sake of easy illustration let’s imagine it loses value by 2%. When the printer tries to buy loaves of bread with it, it will only buy 98 loaves. The printer has lost out on the deal to the tune of two loaves of bread. He supplied to government a service worth 100 loaves of bread and received from government, in effect, something only worth 98 loaves of bread. The government has gained on the deal by 2 loaves of bread. In effect, the supplier of printing services has just paid the government a small toll worth 2 loaves of bread. Just how much government gains and the citizen loses - and the same applies however government spends newly created money into circulation - depends on how much inflation there is. But where there is inflation there is to that degree a further, - 202 -


The Worm in the Apple by Stephen Cook hidden, method of taxing the people. It seems that between working so many hours for the government and so many hours of our lives for a banking sector that in many respects is senior to the government, we spend far less time than we realise working for ourselves and our families. It is little wonder that even in “democracy� we somehow never feel very free.

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The Worm in the Apple by Stephen Cook

FRUGAL GOVERNMENTS

Some governments, like the British as I mentioned earlier, try to present themselves as “virtuous” in their management of the economy, seeking to “balance the books” and “pay the nation’s debts” and so forth. Whether instructed to do so by their creditors or through a failure to understand the debt basis of money supply, they have tried to “restrict” or even reduce the national debt by cutting services and even selling off national assets. Far from such frugal economic policy even making a dent in the national debt, that debt has continued to soar remorselessly into the stratosphere. For “cut the national debt” one might as well say “cut the nation’s throat” because even attempting to do so has had a catastrophic affect upon the national economy. All governments have massive national debts. If they were to stop borrowing, they would not be able to cover their costs and would either have to cut services drastically or raise taxes to even more punitive levels. If they were to attempt to start reducing their national debts, they would have to start removing money from general circulation, creating a money shortage and recession. Recession is precisely what occurs when an idiot government decides it is going to pay off the national debt. Government borrowing is one of the major routes by which money is currently supplied to the economy - the others being private and commercial borrowing. Attempts by government to restrict or reduce borrowing therefore constrict the money supply and push the economy towards recession. In an economy already undersupplied with money, even a relatively small constriction of the money supply can be catastrophic to industry and consumer alike. Britain's national debt amounts to roughly half of all the money in circulation. Any British chancellor intent on "paying off the national debt" must surely realise that if he ever did so he would remove from the economy one of the major sources by which new money is supplied to it, plunging the country into a devastating recession from which it would probably never recover Remember, in a debt based economy almost all money only exists by virtue of someone carrying debt: either government, industry or the consumer and for one person or group to move out of debt someone else - or many someones - must move more deeply into debt. As a nation reduces or seeks to limit the growth of its national debt, its government simply places pressure on industry and the consumer to carry more debt. Therefore, where we have a government that restricts its borrowing, we would expect to find a.) high taxation and - 204 -


The Worm in the Apple by Stephen Cook b.) an explosion of mortgage, commercial, credit card and other avenues of borrowing or c.) both. This is of course precisely Britain's current predicament. A frugal government that boasts about how it is trimming the national debt is essentially conning us because it is simply obliging the rest of us to borrow more. A succession of "frugal" British governments have restricted the money supply and thrown the economy into a prolonged and near-fatal recession that has turned a once mighty industrial and commercial world power into a third rate also-ran, turned private and commercial borrowing into an epidemic, forced mortgage borrowing through the roof and rendered theirs one of the most heavily taxed nations on Earth, not to mention all the accompanying - and ultimately unnecessary - ills of national decline, service cuts, poverty, unemployment, confusion and loss of pride and morale.

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RUNNING OUT OF MONEY

The effect of the debt mechanism is to create a perpetual squeeze on liquidity that is felt at every level - put simply, the world is running out of money. This impacts upon local and central government no less than it impacts upon industry and the consumer. Local and central government entities are, like industry, seeking to deliver services to consumers and receive payment for them sufficient to enable them to stay in business and continue providing those services. The shortfall in consumer spending power, the difficulty in extracting from the consumer viable prices that enable costs to be covered and distributing enough money to the consumer for those prices to be met, affects local and central government no less than it affects any other sector. The difference is that government can more or less force the consumer to pay its prices. The injustice of this is obvious: government runs a system in which it does not distribute to the consumer sufficient money for its prices (taxes) to be met and punishes the consumer for failing to meet its prices! Neither does government suffer the added burden of having to compete in an open market place. The nearest it comes to competition is the threat that the electorate will change government every few years and this is tantamount to merely changing the management of the same monopoly every now and then, with the outgoing management team not obliged to take any responsibility for its foul-ups and not personally liable for the resultant bankruptcies, losses and consumer dissatisfactions. Government’s culpability for this mess is, however, much greater than industry’s in that it is in the unique position of having the power to change the system that so disadvantages almost everybody. Yet its successive management teams have taken no steps whatever to correct the basic cause of their perpetual short-changing of the citizen. In searching or a logical reason for this sustained and dedicated ineptitude, one can only speculate as to how many of our politicians are in cahoots with or working as proxies for the perpetrators of this scam – and upon the fact that all the major political parties are themselves heavily in debt to the money lenders. At this writing, the British press are reporting that huge rises in local council taxes are on the horizon, another nail in the national coffin. It is worth reflecting that local government suffers the same basic problems with debt and budget deficit as does central government. Central government can pass the buck of its self-same problems down to local government by withdrawing central government funding from bankrupt local - 206 -


The Worm in the Apple by Stephen Cook government in an effort to cut its own costs. Local government can only pass those costs on to the consumer in the form of hugely hiked local taxes or drastic service cuts. Thus we see the steady collapse of local government, the accelerating breakdown of services and soaring taxes. Local government is bankrupt. It persistently cannot collect from the tax payer sufficient taxes to fund its services and its huge backlog of debt. It borrows to fund its operations and bridge its budget deficit. Withdrawal of central government funding merely accelerates the process by driving local government further into the arms of the money lenders. Borrowing to fund its operations makes the cost of those operations hugely more expensive to the tax payer. If we imagine that a local council wishes to build a new bridge somewhere and the cost of that bridge is £10 million, if it borrows that £10 million at, say, 5% interest per annum over 20 years, then the total cost to the tax payer of the debt and its interest will be £20 million. In other words, to have one bridge, the citizen actually pays for two bridges! As local government borrows more and more to finance its deficit much as central government does, it thereby merely accelerates its own financial decline and its short-changing of the consumer. It levies its own stealth taxes too. Many councils for example levy a tax called “car parking charges” whereby they set up parking machines in every street, to extract from the motorist a fee every time he parks his car. In an increasingly centralized society, in which people are rendered increasingly dependent on their cars for business, shopping, or getting the kids to and from school and in which the vanishing from the landscape of rural post offices, bank branches, shops and so forth drives people into the towns, they are then punished for it by a bit of polite arm-twisting called “parking machines.” This is portrayed as a measure to “do something” or other about traffic congestion in towns. What it does do is provide local government with an excuse and opportunity to crowbar from the car-driving citizen’s wallet every bit of spare cash it can get its hands on. It is a desperate measure on the part of bankrupt councils to inject a modicum of liquidity into their money-starved operations. It is my contention that, in the interests of best serving the people who elect them, it is the duty of local politicians as much as those of central government to acquaint themselves with the true nature of our money system and to do something effective to correct the hideous flaw that sabotages their every effort to properly manage local affairs. There are of course skilled managers around who make a better job than others of serving the citizen within the suffocating strictures of the debt economy. - 207 -


The Worm in the Apple by Stephen Cook However, the point I wish to make is that no matter how skilled the management nor how much the underlying problem is obscured by spin, “explanation� and the shifting of blame, this situation is going to get worse until it kills off the economy. It simply is not going to miraculously right itself or go away unless its cause is actually addressed. Anyone in government, central or local, who truly wishes to serve his community had better make it his business to understand the system within which he is trying to get things done and then demand urgent reform of it. I can think of few better ways at this point in our history that a man of good will in public office could serve his fellows than to use his influence to bring about the reform of that which is destroying the lives of the people he wishes to serve.

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The Worm in the Apple by Stephen Cook

WHY ROB PETER TO PAY PAUL?

British politicians are currently applying a little emotional blackmail to the motorist who screams at this attack on his standard of living. This exemplifies the way government gets away with murder because nobody has bothered to tell the citizen that the economy is being used by a bunch of elite crooks to enrich themselves at his or her expense. We are told that the government simply cannot possibly reduce the tax on gasoline because if it does so that will mean that schools and hospitals won't get built. Of course in the debt economy we have at the moment, that is perfectly true. In fact if we continue as we are they won’t get built in any case, no matter how high taxes go. We are so used to living in a debt economy we tend to accept such a claim at face value and do not see the flaw in it. Because government refuses to do its job of supplying the economy with money and so allows the chronic money shortage to worsen year by year, it cannot hope to raise in tax enough money to finance all the things it is duty bound to do. If it reduces a tax, it is obliged either to raise the money through another tax, borrow it, or cut services. The economy suffers a dire shortage of money and, as a result, a huge surfeit of debt. There simply isn’t enough money to go around. The burden of shortage has to fall somewhere and wherever it falls, people scream. Government therefore is perpetually trying to juggle the accounts, it engages in a long-running con game in which it seeks to spread the burden or bring it to rest where people won’t kick up too much of a fuss or blame can be assigned to someone else. Then, if people do scream it juggles the accounts a bit more and moves the burden elsewhere for a while. The firemen scream for more pay because their standard of living is in decline, so the burden is shifted to the nurses until they scream, or to pensioners through dwindling pensions, or the police through cut-backs and so on. It, or part of it, is spread through the population through increased taxes or it is dumped on the middle classes through skyrocketing mortgages and house prices where, handily, “market forces” can be blamed and few can trace to inept economic management the fact that they spend a life in debt for the privilege of owning a shoe box with windows in it. Yet, when government raises its hands and tells us there is "nothing it can do about it," that simply is not true. The solution is simple: stop borrowing; rectify the economy's chronic shortage of money by creating and spending into circulation new money debt-free - by, for example, building those schools and hospitals or whatever the government's - 209 -


The Worm in the Apple by Stephen Cook mandated priorities are. If there is a demand and real need for a school or hospital, if the materials to build it are obtainable, if the labour to work in or on it is standing idle and if we have the technical know-how to create it, then there is no reason not to build it. But government creates a reason by refusing to support the economy by supplying it with its means of exchange.

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DISSATISFACTIONS

There are two areas of turmoil that bring irritation and turbulence into our lives and these are worth a brief look because we are now in a position to understand - and handle - the root cause of them. The first is the tension between employer and work-force over pay. Worker demand for more pay (and the conviction that the employer is out to fleece him) and employer resistance to wage demands (and the conviction that the employee is out to fleece him) has been the source of much social division and unrest. In some countries much of this unrest may have, at least temporarily, subsided of late due to several factors. The first is the neutralisation of union power that has left the employee without representation. The second is rising unemployment and the relocation of industries to the Third World where they can take advantage of virtual slave labour. Both are direct consequences of the debt economy. The third is another consequence of the debt economy mentioned earlier: job slavery. The latter two have left the employee without leverage and the increasingly easy access to credit that has enabled credit card and other forms of borrowing to subsidise inadequate wages - becoming in effect another income, albeit one that has to be paid back later at interest. The problem with suppressing the symptoms of illness is that the organism gets sicker without one noticing it and the illness eventually bursts forth from its constraints with a vengeance. As labour unrest is likely to shatter today’s false calm at some point in the future, it is worth understanding what underlies it. And it is this: The employer seeks to keep his labour costs down below a level that enables him to distribute to the consumer enough money for him to be able to sell what he produces at prices that are viable for him. He needs to distribute more money through wages so his goods can be bought but if he does so his costs will rise, the consumer still won’t be able to buy his goods and he will not be able to cover his costs. He resists the employee’s demand for more wages, even though he needs to pay the employee more so that his goods can be sold - because if he pays the employee what he needs so as to be able to buy the goods, the employer won’t be able to sell the goods!

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The Worm in the Apple by Stephen Cook The employee meanwhile wants more wages so that he can buy all the goods produced by industry. But if he secures wages high enough for him to be able to buy the goods, his employer will go bust and there won’t be goods for him to buy! This is the hidden underlying influence that undermines the affinity and co-action that should exist between two vital components of any industry if the industry is to flourish for the good of all who contribute to it. Hidden from view there lies a parasitic, unproductive group that fleeces both sides for its own gain. Added to that one finds also the agitator, trouble-maker or unscrupulous profiteer who seeks to use this basic malfunction for his own ends. The second source of social tension and division is similar to the above and derives from the same source: the debt basis of modern money. Industry is trying to charge prices for its goods high enough for it to cover costs and remain viable. But to cover costs and remain viable it must charge prices higher than the consumer can afford because insufficient money has been distributed to the consumer for the prices industry needs to charge to be met. The consumer on the other hand, with insufficient spending power, is trying to bid down the price of industry’s goods to a level where he can afford to buy them. But to be able to afford to buy them he must bid industry’s prices down below a level at which industry can make enough money to cover its costs and remain in business! From the point of view of the consumer, industry is always trying to “over-charge” for its goods and from the point of view of industry the consumer is always trying to “under-pay” for those goods. Thus, man as employer and man in the role of employee, man in the role of producer and man as consumer is assailed by these contradictions and irked and troubled by their stresses. The co-operative survival endeavour of man working with man is to that degree undermined and human co-efforts mis-aligned.

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WHAT MUST GOVERNMENT DO?

Simple: it must take back the right to be sole supplier of money to the economy. It must satisfy all the needs of the economy by creating money and spending (never lending) it into circulation and at a rate that keeps pace with and nurtures economic growth. When it spends, it should spend in the direction of reducing taxation and so create a new right: the right to keep what has been honestly earned. We have lived for so long with better than half our incomes swallowed by excessive taxes and the rest by needless debt, with declining living standards, massive mortgages and sky high motor fuel prices that we think this is natural. It isn't. It is entirely engineered to our detriment and the benefit of a handful of international bankers. Why don't we demand something better, now that we have escaped the ignorance that kept this hoax out of view?

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IS REFORM DIFFICULT TO DO?

No. Government is doing the sensible thing already with three percent of the money stock - printing and then spending into the economy the notes and coins of which we are all so fond. It just needs to increase that three percent until it is one hundred percent. That way the issuance of money will come under democratic control. There are many ways reform could be achieved but government could start on it tomorrow if it were of a mind to. The next time it has a budget deficit to cover, it could, for example, not bother with having the banks create the needed money and borrowing it off the banks: it could simply create the money itself and spend it. It could do the same year after year, covering its deficit by creating and spending money into the economy. In time all the money in the economy would become debtfree money and debt all but vanished from our lives. It should be noted that all this would strengthen government in the sense of finally enabling it to do its job: to handle unemployment, build the schools, hospitals and transport networks and all those things that governments promise to do, and often start out intending to do, yet consistently find themselves unable to do as they become enmeshed in the sticky, bewildering web of a cranky economy. It would certainly restore a people's faith in its elected leaders None of this is difficult but it falls to us, the electorate, to wake government up to its responsibilities.

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IF IT IS SUCH A GOOD IDEA, WHY DOESN'T GOVERNMENT DO IT?

Government operates within a system it inherited, in which the money powers hold the whip hand and have done so for a very long time. Within that system an interweaving of the banking elite, the political elite and the elite of the state bureaucracy has evolved. It has become to all intents and purposes an aristocracy of largely criminal color, self-serving and jealous of its power and privilege. The lynch-pin of that power and privilege, the keystone of the entire suppressive edifice is the money-scam it nurtures and protects. Government lacks neither the know-how nor the means to carry out reform of the money system. It could do it tomorrow if it had the will. The problem is it lacks the will. It lacks the will because there is no demand for change from the electorate. There is no demand for change from the electorate because the electorate has been kept in the dark. But will the electorate tolerate this scam a moment longer, once it understands it? Or will it take government by the scruff of the neck and demand change? The power lies in your hands. Use it.

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The Worm in the Apple

CHAPTER FOUR

Globalisation The Hidden Strategy of Economic Conquest

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THE POWER DIMENSION

Allowing their governments and media to fall into the hands of an unelected and unaccountable elite of money lenders is a very dangerous thing for any people to do. Yet this is precisely what has happened, albeit government and media forget to mention that small detail. There is a power dimension to the great money hoax. Its mechanism does not merely bleed nations of their wealth; it subordinates governments and their populations to a financial dictatorship. The greatest con trick of all times has become global in its scope and the power dimension of it has become a problem affecting all of the world’s people because he who controls the money supply of the world controls the world. We have the misfortune to have operating on this planet at this time a financial elite that has become accountable to no-one and is able to subjugate and exploit nations for its own ends. It is a dictatorship, which by control of the money supply, the puppet strings of lending and debt, can and does make or break even dictators. The evident ineffectuality of national governments and the failure of "democracy" can now be understood because we can see the forces at work. Indeed, we can see that none of the political systems in place on this planet at this time are true democracies at all. "Democracy" is just a label placed, so as to confuse, upon political-economic systems that observably fall a long way short of government of the people, by the people, for the people. In fact the word "oligarchy", which the dictionary defines as a system of government in which supreme power is wielded by a few, would probably be a more appropriate term. By abdicating the responsibility for creating money and supplying it as a support and service to their citizens, and surrendering that responsibility to private-profit money lenders, governments have in fact dropped the ball with regard to their most important function and most vital source of creative opportunity. They have in effect surrendered the helm to unseen hands and then blame the weather when the ship won’t steer where we want it to go The overwhelming confusion and complexity of the dismal mess we refer to as the global economy can be traced to that single error. - 219 -


The Worm in the Apple by Stephen Cook All this is pretty grim for the majority of us as we endure, in an age of technological marvels, growing economic duress and a global spread of poverty unprecedented in history. Be that as it may, there is another elite group aside from the international financiers that seems to be doing okay while the rest of us are having a hard time – and likewise on a global scale.

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THE MULTI NATIONAL CORPORATIONS

The giant Multi National Corporations (MNCs) appear to be gobbling up everything in sight and have virtually taken over the planet. In terms of their growth, they are, evidently, the most striking economic success story of the modern age. How have they managed it? Having germinated in the developed nations these two hundred or so mighty commercial empires have extended their roots, shoots and tendrils world-wide until they account for well over a third of the world's entire output and over two thirds of world trade. Still growing apace, they have diversified considerably from their original base in manufacturing and agriculture into transport, the media, public services, food, weapons, drugs and finance. On current trends they appear destined to consume virtually all world trade in the near future. The domination of all trade and industry, and thereby all of humanity, by a few mighty, unaccountable organizations is a clear and present danger to human freedoms. Indeed, people are only now waking up to the political and economic reality that these MNCs are more powerful and more wealthy than their own governments. Acquisitive, expansionist and voracious, these organizations have demonstrated time and again that in their impact upon human culture and the environment is far from benign. At the same time governments have proven unwilling or unable to enforce ethical parameters to their conduct and indeed increasingly take on the aspect of agencies managing entire populations on their behalf. We are accustomed to the concept of national government or of national governments in alliance, being the senior political and economic entities on the world stage. We are educated to believe that this is so. However, when we look at how the world is actually structured, we understand the largely unseen but overriding influence of both the banking sector and the MNCs, which are intertwined one with the other.

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A SENIOR POWER ECHELON

Whether we like it or not, whether we have ever had it explained to us or not, the governments we thought were calling the shots are in fact subordinate to this senior power echelon. That subordination derives from the control by the banking elite of the creation and supply of the fuel upon which the machinery of human enterprise runs: money. It is simply impossible for government to operate from a senior position when some other entity controls, for its own purposes, the economic life-blood of the nation it is supposed to govern.

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CATTLE

From the point of view of that banking-corporate echelon, humankind is at best a resource, at worst a nuisance that rather gets underfoot. They consider us cattle. They are in the position, so to speak, of ranchers; governments operate as their herdsmen, marshalling and driving the herd at their behest. By way of an example as to how insidious this process can become, there is the current trend for governments to "get industry more involved in our children's education". In other words, government's priorities have subtly changed from providing an education system that turns out well-rounded human beings able to think for themselves, to turning out human beings shaped to fit the needs of industry. By "industry" of course is meant those entities which wield the greatest economic influence: the MNCs and the powerful few who control their policies. Government meanwhile is caught between two conflicting demands: that of its citizenry who still expect it to serve their interests, and that of those who hold the monetary whip-hand over it and expect it to serve theirs. At this time it is the latter which almost always wins the battle for government compliance, mainly for two reasons: 

The citizenry, have never had the full picture truthfully explained to them



The banking/corporate elite has the power to wipe out the economy the government pretends to be managing, safe in the knowledge that if it does so it is government that will, like a political shock absorber, soak up the anger of a miffed population.

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NATURAL SELECTION?

The phenomenal success of MNCs suggests that they are, by natural selection, the breed of carnivore that is best fitted to flourish in the rough economic environment spawned by a debt-based means of exchange. People see the success of the exploitative business empires known as MNCs and assume that "that is how business is" or assume they are the natural end result of some commercial evolutionary process. But they are the Tyrannosaurus Rex, so to speak, of the prevailing debt-money environment and the debt-money environment is a peculiarly specialized, idiosyncratic and even idiotic one. It is an environment in which money does not and cannot work as money should, in fact is not really money at all in the true sense of the word; it is unable to function in anything but a crippled fashion as a means of expressing man's true needs and wants.

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INTERTWINED

Over a long period of time, control of the lifeblood of commerce and its power to assist those corporate dynasties it considers friends and allies – and often even family – has caused the bankers and the modern MNCs to become inextricably intertwined. The ascendancy of the MNCs derives primarily from the fact that they are so intertwined with the source of monetary power as to form an alliance. At the apex of the global banking pyramid and at the apex of the global corporate pyramids one tends to find the same coterie of international money-dynasties: the global financial elite. One only has to examine, for example, the diverse interests of the Rockefeller dynasty in banking, oil, mining, pharmaceuticals, the media and the mass-control cult of psychiatry. The aforementioned Rothschilds, meanwhile, control scores of industrial, financial, mining, tourist and commercial corporations, although only very few overtly bear the Rothschild name. Money power enables the banks to take over commercial concerns with relative ease. For example, a well publicized refusal by a bank to continue advancing loans to some company will cause the value of that company's shares to fall. The bank can then move in and buy up those shares at bargain basement, whereupon a sudden change of heart and a well publicized renewed willingness to advance loans will send those shares soaring in value again. The bank can then sell the shares it has purchased at a substantial profit or it can simply gain control of the company, force it to take out more loans and rake in the interest on the back of reduced dividends to other shareholders. Examine the commercial interests of the modern international money lenders and you will discover a network that extends beyond banking to manufacture, agriculture, mining, oil, the media, arms, pharmaceuticals, ship building, transport, publishing and more. Examine the identities of major shareholders of the MNCs, the membership of their boards, to whom they are heavily mortgaged, the intermarrying of money-elite families, the membership of supra national secret or semi-secret councils such as the Council for Foreign Relations in the US or the Bilderberger Group in Europe and there you will discover a complex network of the same interests. This is not a sudden development but something that has been growing and evolving for a considerable span of time. A new, powerful aristocracy has quietly installed itself over and above the societies and governments of Man. - 225 -


The Worm in the Apple by Stephen Cook Its power derives not from tribal custom, superstition, the spurious legitimacy of heavenly decree, land ownership, the possession of new technology or even force of arms but from the power it acquired by default to control the issuance of the means of exchange. Through history man has seen various tricks and devices by which groups of men achieve dominion over their fellows but this is something new: the power to turn on and off the tap and direct the flow of money. That it runs counter to what we have been taught was the historical trend towards democracy, that mainstream textbooks never mention it, that history lessons never introduce it as a factor in national and global events, that the media never expose it nor politicians ever speak out against it, makes it no less a reality. But the fact that accepted orthodoxy once decreed that the world was flat made it no less round.

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CORPORATE/BANKING POWER

Mastery over all commerce is virtually inevitable if one controls its very lifeblood, the means of exchange upon which it depends. All modern commerce, indeed even the survival of national economies, currently depends upon the issuance and continued supply of credit. Therefore, he who controls credit can decide who will flourish and who will perish simply through the advancing or withholding of loans. Where all economic activity is utterly dependent upon the willingness of money lenders to lend, it comes as no great surprise to discover that even the giant MNCs are built upon credit and driven by debt. The mighty Nissan Corporation, for example, one of the success stories of the age, was reported in a UK TV documentary as long ago as the 1990s to be a staggering $28 billion in debt. It is possible for the banking sector to crush, by refusing credit, those whom it does not favour and to advance, by granting access to a limitless supply of money created as a loan out of nothing, those it does favour. It can and does thereby control the shape and direction of economic development to suit its own purposes. This power is based not upon any creation of wealth but on control of the wealth others have created. Neither is it earned by great statesmanship, administrative acumen, demonstrated contribution to human advancement, inspiring vision or even military prowess. It is based solely upon the privilege it has been gifted of entering numbers in computer memories and calling them loans. It is a great irony that power on such an unprecedented scale should spring from such unprecedented tenuousness as the crafty juggling of numbers. But this is not the first time in history that some vested interest group has conned or connived its way into a position of power it has not earned. The inherent weakness, however, of power so tenuously based is that once the con is seen through and its legitimacy questioned, it is easily swept away. The trick is to have something decent, just and worthy to put in its place.

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NOT A RECENT PHENOMENON

World history could not be fully understood without a study of the influence upon it of such money powers, yet the majority of us are kept in ignorance of it. This power of the corporate/banking elite is not a new phenomenon suddenly sprung full-blown into human societies. It has been a long time in its development. The international financiers have been actively assisting fellow travelers in the world of "big business" for several centuries. History records that as early as the eighteenth century, the Rothschild banking family, for example, was already milking vast profit from the business of lending money to governments and manipulating the then money markets of Europe, even lending money to both sides in the Napoleonic Wars. They were already in possession of financial resources greater than those of most governments and arguably the richest family in the world. Branches of the family were operating in London and Paris, the capital cities of the world's global powers, and in other of Europe's major cities. By cooperating within the family and through alliances with other banking families such as the Schiffs, they had by the mid 1800s come to dominate all of European banking. They were able to use their vast wealth to assist the expansion of friends and allies. They financed Cecil Rhodes, for example, and made it possible for him to establish control over the diamond and gold fields of South Africa. In the USA they financed the Harrimans in railways, the Vanderbilts in railways and the press, Carnegie in the steel industry, the Rockefellers in oil, JP Morgan's diverse banking and industrial empire and many others. Shortly after the battle of Waterloo, the London-based Nathan Rothschild had managed to become the owner of most of the British government's debt. The Rothschilds dominated the government bond market and had branched into other banking and diverse industrial concerns. The latter half of the nineteenth century was known as the Age of the Rothschilds and one commentator of the time even surmised that they controlled the wealth of the entire world! Then, as now, the big bucks were made through lending to government and lending to government accrued not only vast profit but the ability to influence political events, which in turn enabled even bigger profits to be made.

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The Worm in the Apple by Stephen Cook Loans, for example were extended to support rebels in Columbia against Spanish rule, in support of Dom Pedro's campaign to gain the Spanish throne, with other finance extended, at interest, to Prussia, Spain, Naples, Guatemala, Russia, Mexico, Denmark and even the United States. At the time of the American civil war, the Southern States owed some $200 million to the money lenders in New York, who were able to use that leverage to dictate the orientation of the Southern States towards an over-specialization in cotton for export. It is notable that in that heavily indebted economy, the ultimate device for cost-cutting in labor - the use of slaves - was widely used, in fact the southern economy depended upon it. Within three months of the start of the civil war, European central banks loaned Napoleon III of France, nephew of Bonaparte, Ff210 million to seize Mexico and to station troops along Mexico's border with the US, taking advantage of America's preoccupations to reopen Central and South America to European colonization. They even attempted to lend, at exorbitant interest, money to Abraham Lincoln to "help finance" his war effort, an offer which Lincoln wisely refused. Coming on up the line towards the present day, we discover bankers lending money to both sides in World War One and backing the communist revolution that brought down the Russian Tsar. New York and London bankers loaned money to Hitler to finance the building of his Reich; international bankers financed both sides in World War Two and western financiers were active on all sides in the humanitarian catastrophe that was the civil conflict in Yugoslavia and the list goes on. The International money lenders not only lend money for wars to be fought, and thus drive both sides deeper into dependency upon them, they also lend money for the rebuilding that must take place after nations have been smashed to bits. Modern war thus works to the profound detriment of everyone except the money lenders. They have the power potentially to ensure no modern war could even get started, simply by withholding the loans that pay for them. The fact that they do not use that power to end war and save millions of lives but instead use it to ensure that wars can be fought, clearly shows they have no benign disposition towards the rest of humanity. The point of these examples - and there are many more - is that control of the money supply enables the banking elite both to control commerce and to influence political events - and human conflict above all is immensely profitable for them.

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FERTILE GROUND

The MNC/banking symbiosis is one aspect of the remarkable success of the MNCs. The other is the dire condition of the market place itself. There are strictures and stresses peculiar to a dysfunctional debt-money system, which favour the growth of MNCs. This is not a diatribe against "big business" per se. There is nothing inherently wrong with business growing big where the growth is based upon honest production, fair competition among equals on a level economic playing field, ethical and mutually beneficial exchange, truthful as opposed to manipulative marketing and the provision of a valuable service to humanity that is superior to that provided by competitors. In theory money should serve Man - there is not much point in it doing anything else by functioning as the means by which he expresses demand. And that in turn should shape industry to serve the broad spectrum of Man's needs. Human civilization is, or should be, much more than merely a high-pressure, overly frantic market place for the simple reason that human beings require it to be so. To flourish, be happy and ensure their own long-term survival, human beings require, among other things, equitable exchange, stable communities, high quality highly durable products, wholesome food, efficient public services, control of their own lives, a sense of community, a safeguarded environment and so on. Those producers who fulfill those requirements should flourish and those who do not should fail. Unfortunately, it is painfully obvious that that is not what is happening. If you surveyed the global population and asked how many people had actually demanded or even much liked the social, political and economic environments in which they are forced to live, you would get an extremely paltry show of hands. The debt economy has disabled both the demand mechanism whereby need is expressed and narrowed and distorted the spectrum of demand/need to which industry is able to respond. It tends to favour a particular species: survival in the debt economy is best accomplished by responding to pressures artificially laid in over and above those of real human need. Those pressures serve the needs of the banking sector which controls the supply of money, which is created at source as a means of enriching its creators. It is conceivable too that even the banking elite do not much like the world in which they live. One would probably discover a coterie of rather frightened men, desperate to hold onto their power for fear that if they ever lost it, their crimes might be - 230 -


The Worm in the Apple by Stephen Cook revealed. They wrestle with a system that is inherently unsustainable and lurches inexorably toward chaos. The bogus money upon which we try to run our economies towards the only rational objective of human economic activity, the accomplishment of long term human survival, is inadequate to the task. That fact is evinced by the observable condition of our chaotic, deteriorating planet and societies. This is a deterioration we have proven unable to rectify even though our lives and our children's lives depend on it because we are unable to afford financially to do what in every other sense we cannot afford not to do! In the chaotic and user-unfriendly economic environment that has evolved from the misunderstanding and then perversion of money, a certain breed of cat has spawned and multiplied. Earlier we sketched out the main characteristics of the debt economy: debt-driven growth; commercial warfare; the pressure to cut costs by mass production and bulk sales; the intense financial pressure under which business operates as it walks the tightrope of insolvency; and the pressure upon the producer to sell cheap and the consumer to buy cheap. This is the economic environment in which MNCs dominate and of which they are the ultimate expression. It is the distorted and dysfunctional nature of the debt economy which explains the incredible success of the MNCs. They exist in symbiosis with the very powers that control the money supply and bask in the advantage gained thereby; they have access to unlimited credit with which to finance bulk production, bulk marketing, bulk transportation, the exploitation of new markets and new opportunities on a truly massive scale. They also have the advantage of being unencumbered by concern for the consequences, human, environmental and otherwise, of their actions. This is a quality common among victors in any theatre of war but it does not belong among the architects of decent peace-time societies. The market justifies and legitimizes even the most venal actions because, in the prevailing economic climate, they tend to result in survival of the perpetrator. We live with a system whose demands, restrictions and biases comprise a built-in program that makes inevitable the evolution of commercial entities as ruthless and voracious as the MNCs. At the same time the money system, unable to act in anything but a crippled fashion as a means of expressing real needs and wants, provides no efficient mechanism by which such unfit entities can be compelled to evolve in a more benign direction.

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THE UN-LEVEL PLAYING FIELD

In the debt economy governments tend to be somewhat desperate. Their economies do not work very well. They try to steer them in one direction, only to find that they go veering off in quite another. Although government's hand may be upon the economic tiller, another unseen hand, that of the money lenders, is tugging at it with greater strength. High taxes; high unemployment; declining services; the impossibility of balancing the books without causing a recession; the quest to become net exporters in a world where every other nation is also trying to do what all nations simply cannot do; national debt; commercial debt; consumer debt, lack of investment and just generally a dire shortage of money; these are problems virtually every government faces and to which no modern government has yet found a solution. As a direct consequence of that, governments receive from their citizenry, varying degrees of resentment, cynicism, exasperation, disaffection and often outright civil unrest. People generally do not take kindly to being mucked about. MNCs by their very nature, size and position are willing and able to milk this desperation for all they are worth in their perpetual thirst for money.

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DISPARITY

MNCs are also able to exploit the huge disparity between the Third World and the developed world. They are able to do this because the slope of the economic playing field so richly favors them and disadvantages almost everybody else, including governments. The advantages enjoyed by the MNCs and the uses to which those advantages are put cannot be done full justice in the confined space of a small book. We can do little more here than to summarize briefly some of the salient points and, hopefully, enable you to see through the cloud of mystery that surrounds them and the whole process of globalization. If we have done our, job you will at least by the end of this book understand the basic shape of what is being done to the peoples of Planet Earth at this time.

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HOLDING GOVERNMENTS TO RANSOM

MNCs are driven by the same pressures as any enterprise in a debt economy:    

scarce consumer spending power profit margins that are often dangerously low or even non existent dangerous levels of exposure to debt absolutely ferocious competition from other MNCs that mean they dare not take their foot off the gas for a second or yield an inch of hard won market share.

Keeping costs as low as absolutely possible is of crucial importance, so important that other considerations are overridden. For that reason, when an MNC considers where to site its operations, an economic environment of low labor costs, low corporate taxation, relaxed labor laws and low environmental standards is particularly attractive. In fact wages, taxes and so on are never low enough and every opportunity is used to drive them ever downwards. Governments tend to be keen to attract the international giants. They see them as a way to alleviate the problems of their debt-economies by providing foreign investment, export revenues and jobs for their people, even though such imagined benefits continually prove in practice to be largely illusory. The most desperate governments, clearly, are those of the Third World but even the developed nations will compete most strenuously and make all manner of concessions so as to induce some multinational to site operations in their country. The MNCs are therefore able to play governments against one another, effectively getting them to try to out-bid one another in their endeavor to offer the most attractive inducements. Such inducements can include:      

tax concessions relaxed labor laws relaxed environmental safeguards deregulation of trade agreements and financial arrangements provision of the necessary infrastructure. they can even include the injection by government, as a measure of its "good faith," of millions or even billions of tax payers' pounds and dollars into the proposed new enterprise – little more than a glorified bribe.

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The Worm in the Apple by Stephen Cook The cost of all these inducements is ultimately borne by the indigenous population. It is their tax money, their environment, their safeguards and protections and their willingness to work for lower wages that are laid out on the bargaining table. More often than not, it is the Third World countries that "win" in this game to prostrate themselves before the MNCs. Their people are already poor, disenfranchised and accustomed to wages that considerably undercut those of the developed nations; environmental standards are already low in many cases; and they are desperate for export revenue with which to service their overwhelming debts. Moreover, austerity measures imposed by the World Bank/International Monetary Fund as conditions of their loans have often already brought their economies to their knees, with removal of trade barriers which protect the home market, high unemployment, decimation of infrastructure and a low standard of living. When MNCs locate or relocate in Third World nations, nations of the developed world lose in terms of employment and production. In theory they gain at least the cheap imports that result from goods produced with near slave-level wages in poor working conditions and with scant regard for some Third World nation's environment. However, in seeking to produce (and pay wages and so on) in a Third World nation and sell in a developed nation, the MNC does not distribute in the developed nation the money with which to buy its goods! That money must come from money distributed in the developed nation's economy by those industries which are based there. If the developed nation is losing heavily to a relocation of industry into the Third World or a destruction of its home industries due to competition from cheap imports, even less money is being distributed. The MNC finds therefore a scarcity of buying power on the part of the economy into which it is attempting to sell its goods, which tends to force down its prices, obliges it to cut costs further and to one degree or another nullifies the supposed advantage of relocating into the Third World! At the same time, the shortfall in spending power within the developed economy is has to be compensated for by the borrowing into existence by its government, businesses, home owners and private citizens of more new money! Moreover, the throwing out of work of people in the developed nation obliges government to at least partly supplement the lost incomes by circulating money via its social security provisions. Meanwhile, the supposed benefits accruing to the Third World nation (or any nation for that matter) of attracting MNC "investment" are largely illusory. The MNC sites in the Third World country with a view to producing goods for export. Therefore, the Third World country does not itself benefit from the goods produced - 235 -


The Worm in the Apple by Stephen Cook because they go overseas; in any case the low wage levels and money-starved condition of that country’s economy would ensure that there would not be not enough money in circulation for its people to buy the goods even if they were intended for them! The profits from the export sales of those goods accrue to the MNC, not the home economy, and as the MNC is based in some other nation, they go abroad. In addition, the Third World nation benefits relatively little from increased tax revenues because low tax levels, or tax concessions were among the factors that attracted the MNC in the first place. The benefits become slender indeed when one considers that whatever inducements were offered to the MNC, the financial and other costs of them are ultimately carried by the citizens and tax payers of that country. To compound the felony further, siting production in one country and selling the goods in another country half across the planet adds the necessity for long-distance transportation into the equation. Long distance transportation adds two further costs to the imagined benefits of locating in a Third World nation: financial costs and the massive cost to the environment of excessive transportation. The principle of playing one desperate nation off against another applies also to the purchase of foodstuffs and raw materials. The MNCs can use to considerable advantage their global reach, almost limitless money power and monopolistic domination of the entire global market in consumer durables (where just five corporations account for around 70% of the entire global market); cars, airlines, aerospace, electronics, steel, electrical (five corporations control 50% of the market); cereals (top five corporations control almost 80% of the world market); cocoa (top 3 firms = 85% of the market); tea (3 firms = 85%); and tobacco (3 companies = almost 90% of world trade) and so on. The MNCs can switch purchasing patterns from country to country with relative ease, buying where they can buy most cheaply. When they switch, they devastate economies that lose their inward investment and this in turn obliges countries to fight tooth and nail to gain or keep that investment. As a result, MNCs can keep the prices they pay for raw materials and foodstuffs to an absolute minimum. Nations desperate for export revenue sell to the MNCs at knock-down prices crops which monopolize prime agricultural land. In so doing they sell at a pittance their natural resources and the fruits of the various labors of their people. The combined effect of these practices, the low wages, relaxed environmental safeguards, loss of sovereignty, low financial return upon massive exportation of material wealth, has been to devastate economies where MNCs are active. - 236 -


The Worm in the Apple by Stephen Cook The MNCs have become a virtual blight upon the global economy. They operate as net detractors from rather than net contributors to the effort by Man to raise the economic, social, environmental and human health levels of his civilization. As entities, MNCs are essentially parasitic; they have hijacked human efforts to organize the production of goods and services for the overall long-term benefit of human beings. It is possible for us to produce and exchange all the wherewithal of a materially abundant civilization, by rewarding those who make a net contribution to that endeavor, without at the same time actually wrecking civilization. But there is a fundamental that must be introduced first so as to enable supply and demand to work properly: proper money.

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HOST NATION DEPENDENCY

There is a close parallel between the IMF/WB alliance's "investment" into nations (particularly Third World nations but increasingly nations not originally considered part of the Third World, such as Russia) and the inward investment of MNCs. These banks invest loans into the target country, expect more eventually to be repaid to them than was invested, either through eventual repayment of the loans or an eternal stream of interest payments if the loans are not or cannot be repaid. It should also be pointed out that banks are not particularly interested in the repayment of the original sum loaned, which was conjured out of nothing and is cancelled out of existence as it is repaid, but in the continual or even perpetual repayment of interest on the loan, which is not cancelled out of existence and constitutes their profits. The effect of such lending and the obligation to repay is to distort the economy of the target nation towards a preoccupation with exports so as to earn the revenue with which to repay the loans or the interest thereon. To the degree that the economy is so distorted, the manufactured goods, agricultural produce and so on (wealth) created by the nation's people flow out of the country as does the revenue from selling it. The people are increasingly placed in a position of producing wealth but receiving minimal exchange for their production. It is a condition that approximates slavery. In fact, one could say that far from having been abolished, slavery is at this time more widespread than ever: it just isn't called slavery in so far as its guise is different and its method of enforcement so sophisticated that the enslaved do not see it for what it is. Similarly the MNCs invest (borrowed) money, plant and machinery, and expertise into a country. The new enterprise thus created is geared to exports to the developed nations and again there results a net outflow of material wealth and, as MNC profits are expatriated. The net outflow of money from a country renders the country increasingly dependent upon IMF/WB loans and/or MNC inward investment. This provides the MNCs as well as the banks with an inordinate amount of leverage over nations now dependent upon them for at least some kind of employment for their people - either directly or via various ancillary industries - some kind of circulating money stock and exports with which to repay their overwhelming debts.

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The Worm in the Apple by Stephen Cook Withdrawal of MNC activity can therefore hit hard a nation which will remain committed to interest payments come what may, as was the case in the Latin American debt crisis of the 1980s when the MNCs switched investment to other areas where they saw more opportunities for profit and growth. The same principle of growing dependency upon MNC investment also applies, although perhaps to an as yet not quite so severe degree, to the developed nations. Governments such as Britain's can be witnessed tugging their forelocks to the international giants, bending over backwards to "make themselves attractive" to international investors (but not necessarily their own citizens) and sweating while the latter decide upon which money-starved nation to bestow their borrowed billions. Industrialized nations, whether once great or still great, built themselves up from the agrarian societies of the Middle Ages to the technologically accomplished powerhouses of more recent times. This was not necessarily a smooth, untroubled ride; the process may not yet be complete to the full satisfaction of their people; and there may be considerable flaws along with the pluses but the building process came through the ingenuity, invention, energy and organizational efforts of their people and statesmen. Yet now they are losing the inner vitality to create their own economic life, warts and all, to build or foster their own industries, to shape their own futures. They become instead increasingly reliant upon outside agencies to supply that vitality. This is hardly surprising when one realizes they no longer create their own means of exchange. There is an inexorable disenfranchisement taking place of people whose jobs and futures can be lost and communities shattered by decisions made in distant boardrooms, whose wage levels are perpetually under-bid by the near-slaves of other nations and whose own media are dominated by three or four global corporations and cannot be relied upon to keep them accurately informed - mainly because their purpose is not to inform but to control. At the very time when the political and media rackety yak is all about democracy and freedom, what has actually occurred is a deterioration of the citizenry's ability to affect its own destiny or have any real say in the business of production and exchange- or even to know with any reliability what the heck is really going on. As, for example, miners, shipbuilders, car workers, farmers, fishermen and so on in Britain will testify, such manifest helplessness is hardly compensated for by the right to place an "X" on a piece of paper every few years so as to choose which group of spin merchants will run the next pretend-government to dance to the tune of the money powers.

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WB/IMF CONDITIONS SOFTEN UP TARGET NATIONS

As we have seen, the international banking alliance attaches conditions to its loans. The conditions imposed effectively soften up the target nation for invasion of their economy by the corporate giants. The dropping of trade barriers that protect the home economy and expose it to subsidized foreign imports, while domestic subsidies are banned under the terms of IMF/WB programs, works to the considerable advantage of the MNCs; they are able to import technology and materials from foreign branches of their own global empires and are thereby able to set the costs of such imports to undercut producers in the host economy. Moreover, imposed devaluations of the host nation's currency raises the cost to producers in the home economy of any materials they need to import and the recession caused in the home economy by IMF/WB austerity programs considerably depresses domestic profits and sales. Added to that, the higher taxes imposed under the austerity programs, cuts in services and infrastructure, or the increased gearing of services and infrastructure to the assistance of exports, disadvantage home producers, while the foreign interlopers enjoy the relative advantage of being required to pay low corporate taxes. The combined effect of imposed domestic recessions, of banning of domestic subsidies, of currency devaluations that make imported raw materials more expensive, of exposure to competition from subsidized foreign imports of finished goods and so forth, is to plunge domestic industries into severe difficulties. Those difficulties often result in bankruptcies, business failures, foreign buy-outs and takeovers and of course a lowered standard of living for the indigenous population. There is no spectacle more venal than that of the financial elite's vulture-like milking of the very misery and desperation it itself engineered. We refer here to the so-called "debt-for equity swaps", a technical sounding term for total rip-off. This is a caper whereby a nation's government is persuaded to hand over public industries and other national assets to the banks in exchange for "forgiveness" of a portion of its outstanding debts. The banks thereby acquire the industries and assets of debtor nations at knock-down prices and can sell these on cheaply to the MNCs. Correction: such assets are acquired for no price at all because the loans are of numbers tapped into computers and the "forgiveness" involves the tapping of more computer keys so as to reduce the numbers a bit!

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The Worm in the Apple by Stephen Cook The debtor nation meanwhile experiences a relatively small and brief alleviation of its number burden, which is quickly nullified as the interest payments resume their relentless climb off the top of the graph. The overall result is a transfer of ownership of a nation's wealth and resources to foreign banks and multinationals. Never in the field of human endeavor have so many been so thoroughly ripped off so easily by so few. The deplorable fact that IMF/WB conditions create the perfect climate for MNC operations is evinced by the fact that the MNCs themselves negotiate removal of protections from the home economy, deregulation of trade and finance, removal of domestic subsidies and so on as a condition of their investment in a prospective host nation. As a high degree of dependency upon MNC investment takes hold, nations across the globe are deregulating their economies according to the same "free trade" prescription, virtually flinging wide their gates and strewing palms before the advancing feet of their commercial conquerors. But this is hardly "trade" at all in any equitable sense. It is more akin to mugging. And there is nothing free about it. It is little wonder that governments appear remarkably powerless to protect their own people from the often highly unjust imposition upon their rights and traditions of the demands of international big business. Their loss of power traces back to the moment they abdicated their responsibility to serve their own economies with a supply of money with no strings or debts attached. They rendered their nations dependent upon the inward investment of exterior agencies for the maintenance of a supply of circulating money; withdrawal of "investment" can and has drained economies of money and plunged them into catastrophe. Governments make whatever concessions the investors require so as to ensure that investment continues. The powerlessness of governments the world over, and the resultant misery of their people, will continue until governments reassume the responsibility of money creation. And governments perhaps will only re-assume that responsibility when their people demand that they do so.

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TAX AVOIDANCE

In addition to the subsidies and inducements provided by host nations, MNCs gain considerable advantage by some creative accounting that enables them to reduce their own tax burden. MNCs often include strings of sister companies situated all across the globe in countries with varying rates of taxation. As the sister companies buy and sell materials and components among themselves, MNCs are able set prices so as to register the greatest amount of profit in countries with low rates of taxation and low or negligible profit in countries where tax rates are high. This in turn intensifies the competition among nations to set the lowest rates of taxation as part of their package of inducements designed to attract the MNCs. Whilst the tax authorities tax everybody else in the economy and seek to extract from them every penny to which government considers it is entitled, the corporate tax playing field is grossly tilted to the advantage of the MNCs. As the MNCs succeed in avoiding tax or gaining tax concessions, there results a loss of tax revenues for most host nations. That loss of tax revenue shows up as higher taxes levied upon the host nation's home economy or a decline in services the host nation's government is able to provide its people and indigenous industry or some combination of the two. MNCs prosper, in other words, by an essentially parasitic process that feeds upon the net loss of wealth and energy of their hosts. It is exchange that is essentially criminal in nature: a lot of take and little or no give.

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CAPITALISING ON INSTABILITY

There is an inherent instability in national economies and in the global economy. This is referred to as the "business cycle", the rollercoaster of periodic boom and bust in which an economy can be doing relatively well one minute and swing into recession the next. It is worth understanding the cause of the phenomenon, which is not a natural cycle at all but is entirely created by a manipulation of the money supply. Put very briefly, when the banking sector loosens up on its lending by, for example, lowering interest rates, money becomes "cheaper" and more plentiful. Consumer confidence is said to be high, which merely means that people are more willing to borrow. Cheaper/easier borrowing increases the rate at which money is supplied to the economy. There is "more money about", industry finds it easier to sell and the consumer easier to buy. This is the boom part of the cycle. When banks tighten up on their lending by making borrowing more expensive through a rise in interest rates or by becoming less willing to extend new loans or calling in existing loans, the supply of money to the economy is restricted. There is now "less money about" and saddled with higher interest payments on existing borrowing, the consumer has more difficulty in buying and industry more difficulty in selling. As the money supply contracts, the economic activity that depends upon it also contracts, businesses go bust and property and businesses are repossessed by the banking sector. The process is engineered by the tightening or loosening of the supply of borrowed money into the economy and the result is that each time we go through the bust part of this cycle, the money lenders and their symbiotes are able to acquire assets, effectively creaming off a portion of a nation's existing wealth and productive capacity, then either retaining ownership of the newly and cheaply acquired assets or selling them on. The MNCs are able to capitalize upon these economic mood swings. Nations are at any one time at different points of the cycle: France might, for example, be in the middle of a boom, while Britain is just coming out of recession and Germany at the same time just entering recession. As growth rates, exchange rates, interest rates, tax rates, wage levels, property prices, stock market prices and degrees of confidence or desperation of national economies fluctuate, MNCs can, by deciding where to invest or withdraw investment, where to borrow money, which currencies to buy or sell, turn the instability of economies to marked advantage. Global organizations that span international boundaries and which are closely allied with the banking sector are ideally placed to borrow, for example, from the domestic banks of host nations where interest rates are low; withdraw from nations where - 243 -


The Worm in the Apple by Stephen Cook profit margins become tight; buy out or take over failing industries in areas hit by recession; site where wages are set low courtesy of a background of privation; buy land where the poor can be easily evicted and prices are accordingly low; buy cheap goods from nations having trouble selling their exports; invest where "strong" governments promise little inconvenience from human rights and environmentalist groups and so on. So great is the power of the MNCs, so desperate are many governments to attract and hold onto some promised source of revenue, no matter how modest, or employment no matter how abysmally paid, that the MNCs can also by their investment policies influence the very fluctuations from which they benefit. Such moves by the MNCs are not, you will notice, governed by genuine considerations of productivity, the skill of the workforce, the physical suitability of location or the social need for their presence. The overriding priority, the single most powerful survival trait is the ability to use every imaginable trick, ruse or advantage to cut costs to the lowest possible level. But cutting costs simply reduces the amount of spending power circulated and, like a tightening noose, demands a further round of ever more ruthless cost-cutting.

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WELFARE BENEFITS

As with all of industry in a debt economy, the MNCs are unable to distribute into an economy sufficient money for their goods to be purchased at prices that enable them to cover all their costs. They therefore rely upon capturing purchasing power from some source other than the purchasing power they themselves distribute through wages, salaries and other expenditures. They rely in part upon capturing purchasing power from ever more distant markets, by crossing international boundaries and invading markets all across the globe. However the world economy is a finite system and there is a point where markets cannot become more distant. We have already arrived at a global economy where the international giants are all busy invading one another's territories, attempting to capture spending power from one another, in a system where globally there is and always will be, unless the debtmoney system is replaced, insufficient spending power. Welfare benefits and other government expenditures therefore become a source for circulating additional spending power, in that they involve governments borrowing more money into existence and distributing it to consumers: that is, running up their national debts and carrying huge budget deficits. MNCs, in other words, externalise the cost of their activities upon governments. As they relocate, re-align international operations, further mechanize or for a variety of reasons sack or lay off workers, it is the government of the country where the workers are sacked which must distribute benefits to support them. It is government which competes with the government by offering tax incentives or subsidies and the cost of those creates budget deficit problems. It is government which provides the infrastructure necessary to attract the MNCs and the cost of this bears down upon its budget deficit. Where some MNC buys up prime agricultural land for export crops it is government which has to relocate displaced people, support unemployed smallholders or invest in compensating for the lost domestic food production. It is government therefore which finds problems dumped in its lap and which borrows more money into existence in order to deal with them. It is government, in other words, which borrows and distributes the extra spending power required for the MNCs to be able to sell their goods.

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The Worm in the Apple by Stephen Cook Ultimately though, it is the people who, through increased taxes or declining services, bear the cost. We wind up right back where we started: people carry an ever increasing burden of debt so that a means of exchange can circulate and any economic activity at all continue to exist. But how much more debt can people carry?

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EVERYBODY LOSES

The theory is that where an MNC, based in a developed nation such as Britain or the US, invests into a poorer nation, both the poor nation and the MNC's home nation will benefit. Actually, they both lose. The host nation will gain, the theory goes, from the wages paid to its people and the corporate taxes paid to its government by the MNC. The home nation will benefit from its initial outflow of capital into foreign investment as the profits made by the MNC are repatriated. This is not what happens at all and there are several reasons why. In the global economy at this time there is not a freely existing and circulating stock of money sufficient in quantity for industry to be able to set prices the consumer can meet, so profits can be made and solvency maintained. In fact, there is hardly any true money circulating at all, merely a vast surfeit of debt; the means of exchange exists upon a condition of insolvency. Home nations like Britain, Japan and the US experience an outflow of money as their MNCs invest abroad and then wait with bated breath for the money to return with the MNC's profits. Only this never quite seems to happen because, as the money returns, some of it is removed from circulation as it is used to repay debts and the return flow never matches the outflow of fresh funds for further investment. In addition, as the MNC sets up production abroad, it will be attempting to make the required profits by selling what is produced, or at least a portion of it, back into its home nation. But it has not distributed in the home nation the wages with which to buy the goods and much of the profits which are expected to return to the home nation will be made from money already circulating in the home nation, having been distributed by the home nation's domestic industries! The MNC's host nation meanwhile will be attempting to repay its debts to the international banking alliance. It must acquire the money with which to do so from taxing the corporate profits of the MNC or the wages the MNC pays to the domestic workforce it employs. As we have already seen, the MNCs frequently manage to keep their taxes and the wages they distribute into the host economy extremely low, which greatly restricts the benefit accrued to the host nation from the MNC's presence. However, as taxes are collected from the MNC and its workforce, and these revenues are used to repay often massive foreign debts, the money so used returns to the banking sector and disappears from the host economy altogether.

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The Worm in the Apple by Stephen Cook Therefore, the money the MNC has invested into the host nation is now, all or in part, not available to be regained from the host nation. This increases the obligation upon the MNC to make its profits by selling into the developed nations. But these are the very countries that are expecting money which flowed out to the poorer nations as foreign investments to be repatriated from the poorer nations as MNC profits! And they most certainly do not wish to outflow more money through the purchase of foreign imports!

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WEAPONS AND DRUGS

An understanding of the nature of a debt-based economy sheds light upon two of the most dire phenomena of the modern era: the proliferation of weapons of death and the drugging of the global population. When we consider the success of the MNCs in the modern era, we notice two particularly ominous success stories: that of the weapons manufacturers and the pharmaceutical giants. Such companies are driven by the same economic pressures as everyone else: the pursuit of ever-expanding, ever more distant markets so as to capture perpetually short spending power, sell all that is produced and, hopefully, remain solvent thereby. This voracious pursuit of sales has resulted in the most sophisticated, most awesomely vicious weapons of death appearing in every backwater where people have an argument. It has resulted n the widespread over-use of medical and, particularly, psychotropic drugs, the spin-offs into a black market in weaponry and an equally black market in illegal street drugs. As ever it is the proliferation of the "legal" trade that gives rise to a thriving illegal trade. As ever, too, one finds the weapons manufacturers and the drugs giants inextricably interwoven with the global banking/corporate elite. Drugs and weapons manufacturers are, like every other business, seeking to acquire and expand market share, to find ways to increase demand for what they produce so as to divert the consumer's scarce spending power from the purchase of other products. How does one increase a demand for weapons of death? We leave that to your imagination but pause briefly to mention two things: first, where there is war one will find the bankers lending money to both sides so that the weapons needed to fight the war can be purchased; second, in a world economy marked by ferocious competition where desperate nations are suffering varying degrees of internal instability and unrest as a result of their failing, bankrupt economies, international and internecine conflict are common phenomena. Not only that, conflict guarantees both the repeat sales of weaponry and an expanding market. As "winning the war" becomes the overriding consideration for both sides embroiled in it, the purchase of more tanks, guns and fighter aircraft takes absolute precedence over every other commodity available in the market place. And conflicts, once started, tend to broaden and bring more and more participants into the - 249 -


The Worm in the Apple by Stephen Cook arena, all of whom will be shopping for AK47s, Scuds, Claymore mines and SAM missiles, using money borrowed from the banks. Perhaps more than any other sector, the weapons manufacturers profit and grow fat as a direct consequence of the inherent instability and stresses of the economic system. How does one increase the market for drugs? Well, one only has to study a doctor's mailbag or the adverts in medical journals to understand just how intense has become the marketing effort of the pharmaceuticals. It helps if you can re-educate everyone into joining the pill-popping culture and reeducate over-worked physicians into becoming dispensers of chemical palliatives. It helps too if one has the bogus science of psychiatry hard at work upon a population already anxious and unhappy, convincing everyone they are mentally ill from birth thanks to mythical "chemical imbalances" in their brains, the remedy for which is to chemically attack their brains with a myriad of capsules and pills. It further helps the sales drive when those capsules and pills cause physical complications requiring more pills, or mental derangements requiring more pills, or dependency requiring even more pills. This in turn pays dividends for the global financial dictatorship in that it helps them avoid being unmasked because people chemically stultified or straight-jacketed by drugs have lowered IQs and an impaired ability to learn - that is, it is more difficult for them to assimilate and evaluate information. After all, the last thing the international banking elite requires is a population bright and alert enough to see through their fraud or resilient enough to put an end to it.

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GLOBALISATION - ANOTHER INFLUENCE

There is yet another influence at work, similarly nourished by the banking fraud, which plays its parts in the subjugation and disenfranchisement of nations. This is the power of International Finance, which dwarfs even that of the MNCs. The MNCs, it can be argued, at least have a productive base, however distorted it may be. To survive and grow they must at least produce, market and sell something. International Finance on the other hand prospers and grows by producing, making or providing nothing. Its operation is naked and egregious parasitism. And it sickens or kills the host. International finance manipulates money in order to make money. Around $1 trillion is traded daily on the international money markets alone and the trade between those great casinos, the world's stock markets, is simply incalculable. International financial entities fall into several basic categories; pension funds, trust funds, investment houses, hedge funds and banks. Although differently constituted, all are essentially vast pools of money provided by all manner of investors and savers large and small, against which many times the amount held in their funds can be "leveraged" (borrowed) by the now familiar method of banks creating the money for that purpose. To give an idea of how vast the financial clout of these various money pools actually is, let us take by way of example US pension funds which alone hold in excess of $4 trillion, many times the actual stock of circulating money in the economies of all but the very largest and wealthiest nations, or the hedge fund managed by the international financier George Soros, which holds in excess of $11 billion against which ten times that amount can be leveraged. This places extraordinary predatory power in the hands of fund managers like Soros, who stalk the globe looking for ways to make the money make even more money without producing so much as a single match stick in exchange for such profits. Soros is able to use his inflated money power to affect the course of events on the world markets and maximize his gains. For example, an announcement by him that he expects the pound to fall in value, coupled with a furious selling by him of pounds on the money markets would cause other investors to follow suit, the pound to fall in value and his "prophesy" to fulfill itself. As the pound bottoms out, he is then able to buy up pounds at rock bottom prices and make a fat profit for his fund. And this is precisely what he has done on several occasions: he hedged against the pound, which caused its collapse and led to Britain's "Black Monday" and her ignominious withdrawal from the EMU; and he hedged against the German mark with an - 251 -


The Worm in the Apple by Stephen Cook announcement in the New York Times that he expected the mark to fall in value against all other currencies. It did. In the same way, the likes of Soros are able to cause the US, British or any other stock markets to crash simply by announcing they expect them to do so, dumping their own shares, prompting other investors to follow suit, then buying up shares cheap as the markets hits bottom. Here again we see the power of money able to override the sovereignty and honest endeavors of nations, without any regard whatever for the consequences to productive and honest people.

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INTERNATIONAL PREDATORY POWER

The colossal financial power possessed by fund managers can be used to devastating effect on the world's money markets. The ability to use a vast pool of borrowed money to buy or sell shares or currencies can influence their value on the international markets, causing surges or crashes in share and currency values, affecting national economies in ways that are dis-related to the condition of the actual industries within that economy and to suit the requirements of the fund managers. And the requirements of the fund managers are simply how to make their funds grow bigger. Asset stripping is an example of how this financial power can be used. Company shares are bought up so as to achieve control of the company using money borrowed for the purpose from banks which create it for the purpose. The company is then broken up and its various assets sold off for maximum profit to both the corporate raider and the bank. This often has little or nothing to do with the productive health, value or stability of the company, nor the needs of its workforce and customers but merely preys upon fluctuations in share prices. Much of the "investment" of international finance is short-term and speculative, present in some nation's economy for as little as a few months or weeks before migrating on to some other nation. Although termed "investment," it is not money actually invested in building or producing anything. Fund managers seek to buy shares, stocks and currencies when their values are low and sell when they are high, using the profits made to move on and buy elsewhere where values are low. What is looked for is nations that have suffered or been made to suffer recession, where stocks and shares are consequently undervalued. Stocks and shares are then bought up, pouring fund money into the nation and as its economy experiences an upturn in which dividends increase and assets grow, reaping high returns on their investment. Such investment is always orientated towards production for export and export revenues ensure that the banking sector will receive the interest payments on its loans. The money used to invest in a nation at the bottom end of the cycle is withdrawn from some other nation where it is already invested and which is currently at the top end of the boom-bust cycle, where rising stock and asset values are considered to have peaked and future returns are expected to be low. There follows a massive dumping of shares and withdrawal of funds from the "boom" nation and the profits from such sales is then moved into the "bust" nation. The boom nation is thereby moved into recession and the "bust" nation into a boom. - 253 -


The Worm in the Apple by Stephen Cook We have described how the periodic tightening or loosening of lending by the banking sector creates the boom-bust cycle. The additional influence upon an economy of this massive movement of funds not only preys upon but exacerbates the cycle.

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DEREGULATION GIVES THE MONEY POWERS MORE POWER

The financial deregulations imposed on nations by the IMF/WB as conditions for lending, or by the MNCs as conditions for further investment, not only lay nations bare to the full storm of international commercial warfare but also enable fund managers to make instant international investments and to withdraw funds at will from any nation, business or sector anywhere in the world. This enables fund managers to take adroit advantage of the fluctuations of relative economic conditions between nations - fluctuations which they and their allies in international banking can create or exacerbate at will.

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BOGUS BOGUS MONEY

Even the money held by these funds is very largely not actually money at all. A pension fund for example, which is said to hold £100 million does not actually hold £100 million of money but £100 million of assets in the form of stocks, shares and government bonds and treasury bills. Despite being referred to as “assets”, bonds (a debt of the issuing government), stocks and shares (properly considered a debt of the issuing company) are all a form of debt or IOU. Stocks and shares have an assigned value, expressed in monetary terms but this value can fluctuate markedly. Here again we see a vast pool of debt, an alternative debt-money, that acts as an additional financial medium to regular debt-money. In other words the global economy runs not only on bogus-money but on bogus bogus-money as well!

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THE PRECARIOUS POSITION OF NATIONS

This activity on the part of international finance greatly destabilizes nations economically and renders them unable to predict their own economic fortunes with any certainty. Nations are rendered prey to predatory monetary fluctuations on a massive scale, over which they have no control and which disrupt but do not derive from their own efforts to produce and trade. Such fluctuations are often disingenuously portrayed as the natural "market forces" of the "free market". This is simply a lie. The forces at work are the whims of the international money manipulators, which override the normal working of a market place where produced goods and services are traded; and they work solely for the benefit of a small clique that does not produce. Since when do non-producers with nothing to contribute have a right, not only to operate in the market place but dominate the market place as if they are important? Reckless lunatics are running the asylum we refer to as the “economy,� in which only the possessors of large numbers in computer memories are free and productive enterprise is prey to their every whim? All this places any nation in a precarious position, at the mercy of arbitraries and unable to exert true mastery over its own destiny. And that applies to the "wealthy" nations too. Britain for example is at this writing enjoying a period of modest but much vaunted boom. Her government rejoices in the record levels of inward investment her economy attracts - investment moved, incidentally, out of Asian nations with the resultant near destruction of their economies. But all it would take, as Britain nears the top end of the cycle and future returns become limited, is for the international money powers to look to somewhere like Japan, currently at the bottom end of the cycle, as a promising rich harvest for shortterm profits and money will suddenly move out of Britain and she will be in the nightmare of recession again. In fact, all it would take to bring about a sea change in Britain's fortunes would be an announcement in the media by someone like George Soros that he expects the British market to take a down-turn and the prophesy will fulfill itself! When it happens, the incumbent British government will doubtless become extremely unpopular and the faith of the British people in their democracy will drop another notch. - 257 -


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Well, perhaps government deserves all it gets for its crass failure to understand economics. But democracy should not be tarred with the same brush because what is at work is as far removed from true democracy as one could get.

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GLOBAL FISCAL ANARCHY

International finance is able to us its power to create money to manipulate and seize wealth from those who create it, to do in other words virtually whatever it likes, because it operates at a level of global fiscal anarchy where no laws or common human decencies exist to curb such destructive activities. But is a thief any less a thief simply because no laws exist to curb, nor moral consensus to reproach, his conduct? If he operates flagrantly and manages to pass himself off as a pillar of the community, does that make the thief any less a blight upon honest men? And if the thief can make the laws to suit his needs, what then becomes of honest men? What becomes of them, I suggest, is something very like the chaos in which they now live. The various international agreements which comprise what passes for law at this level tend to be laws designed to benefit or enable such conduct by the money powers. That governments subscribe to them gives them their force and legitimacy. Governments subscribe to them because, desperate for loans and inward investment, they must remain "in good" with the money powers. They must remain "in good" with the money powers because they have relinquished the function of supplying their own economies with money and so depend upon the money powers to do it for them. Governments have, in the final analysis, disempowered themselves and continue to do so needlessly with every day that passes. How nations survive at all this blatant manipulation of their economies by exterior powers is one of the mysteries of the age. It says a lot for the endurance and persistence of ordinary hard-working people. But endurance is not enough. Enduring something does not change it. Sooner or later people just have to say "no more!�

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CONQUEST

The recent pattern of events in Asian economies such as Malaysia, illustrate how the powers of global debt-money engage in the factual takeover and plunder of entire nations. That pattern is essentially and in summary this: 

The target nation (or nations) has been enjoying a period of relative boom, with economic growth and much inward investment. Although it has borrowed (and who hasn't?) from the IMF/WB/banking alliance, its debt levels are not considered excessive by modern standards, although one might be tempted to consider a nation that owes more money than exists somewhat in over its head.

That plentiful inward investment has been conditional upon the deregulation of the target nation's economy, dropping protective trade barriers and financial regulations and generally bending over backwards to create conditions favorable to the international bankers, fund managers and MNCs.

A sudden, orchestrated, withdrawal of money from the economy occurs. That money is re-invested. In this instance, the re-investment is into western economies such as the US and UK, which enjoy a huge (but destined to be temporary) fiscal boost.

The sudden loss of financial investment causes the target economy to plummet: there are huge falls in currency and stock market values.

The IMF/WB loans are in dollars, pounds and so on, and the target nation's existing debts remain. As the target nation's currency falls in value against the dollar and pound, the debts are magnified as they become greater in value relative to the target nation's own currency. Additionally, exports are by the same token rendered cheaper, so more of the nation's produced wealth must now be exported so as to make the revenue necessary to pay the interest on the loans. 

The target economy is drained of money. In the consequent recession businesses and farms fail and government must pick up the social and economic cost thereof. This means higher taxes, government cuts and so on. Government's balance of payments problems are multiplied and government becomes even more desperate than before for inward investment.

All the hard work put in over many years to build up and modernize an economy is flushed down the drain almost overnight.

The crash in share values, the bankruptcies and sell-offs enable the international investors to purchase assets and purchase or re-purchase - 260 -


The Worm in the Apple by Stephen Cook shares at rock bottom prices using some of the profits they made when they sold shares at the earlier higher prices. Foreign investors are thereby able to make massive profits while retaining or even expanding control and ownership of the nation's assets. When investment does return to an economy now more firmly under foreign ownership, and shares rise again and so on, an even greater amount of company profits and dividend payouts will now go abroad, creating a further drain on the national income. 

The IMF/WB moves in to broker further bank loans to bail out the stricken economy, attaching further conditionality to their lending to which an enfeebled and desperate government will comply.

What has occurred is an almost overnight restructuring of national economies, which are taken over by and moved under the control of a financial elite of destructive nonproducers which has no nation, no allegiance and no sense of personal responsibility for the devastating consequences of its actions.

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SLAVERY

It is not difficult to see just how debilitated the world's debt-based economies have become; a look at the world in which we live swiftly reveals evidence on every hand that this is so. However, it is the enslavement of poorer nations that spares western nations temporarily - the worst agonies of the breakdown of production and exchange. In other words, that the West has been able to maintain any acceptable standard of living at all, creating the appearance that the system is "working" - and thus sparing the bankers and politicians responsible the wrath of outraged western peoples - is due to the fact that this relative "success" depends upon slavery. Western people “benefit� from cheap cash crops courtesy of the ability of multinationals to squeeze people off their land or the desperation of indebted producer nations to sell cheap in a buyer's market. Western governments and multinationals protect oil supplies at any cost. The price of consumer goods reflects the "willingness" of people to work for subsistence wages in sweat-shop conditions In other words, western living standards are bolstered by underlying theft, exploitation and injustice. If it were not for these injustices the West too would either starve or be experiencing such extreme difficulties that the failure of the system would be obvious. And we would not tolerate it. This is not a criticism of western people, nor intended to suggest that our survival depends upon a continued willingness to tolerate the enslavement of our fellows. These dreadful truths are only true in a debt-money system but even then the fact is that no-one gains from all; it is just that some lose more heavily than others. The way to survive, then, is to cease to be fooled by temporary palliatives and actually handle the cause of the disease. In a world of unprecedented technical know-how, swift communications, massive productive capability and, at grass roots level at least, an enlightened yearning for justice, the creation of a decent life for all nations is entirely possible. Indeed is entirely an oddity that it has not yet come about, the we have wound up instead with an inept system that depends upon slavery to create the illusion that it is a workable one, and because of a single folly: the use of debt as our means of exchange. - 262 -


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

If we can address that single folly and eradicate it, we can not only live in a manner to which we have become accustomed, but live far better than we have been allowed to believe is possible.

And so can all nations.

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DUMBING DOWN THE PEOPLE

It is worth briefly mentioning a few other phenomena, which cease to be quite so baffling when viewed in the light of the globalization con game being played at this time. When we understand that the basic nature of the game is not - contrary to what we are told - liberation or democratization but of nullification and control, things begin to make more sense. There is the phenomenon, for example, of the world's growing illiteracy, a decline which afflicts even the most developed nations. The United States and Britain are cases in point; at the beginning of the twentieth century they enjoyed workable education systems that had achieved almost total literacy for their populations. As the twentieth century progressed, new methods were introduced that caused literacy to go into steep decline. The lowering of standards in school work and examination grades is glaringly obvious for anyone who cares to look, as is the growing weight of bureaucracy that bogs down the genuine efforts of teachers to do their jobs. Why on earth would any government introduce and then continue to support methods which reduce literacy levels of their people? Why would anyone tolerate the impairment of the ability of teachers to do their jobs and populations to read, learn, comprehend and evaluate information? Could it be that, unbeknownst to us, someone has conceived for our education systems the purpose not to render people more able but to render them less able? Similarly we assume the purpose and function of the media is to inform and believing that to be the case we are continually tripped up and mystified by the media's actual behavior: the distortion, filtering, slanting and corruption of information. Could it be that the media's purpose, so far as those who actually control its policies are concerned, is to control the behavior of the citizenry via the information it is fed and upon which it bases it responses? When we understand that most of the "information" that flows around the planet is controlled by about four global corporations and is neither free, impartial nor trustworthy we begin to see the disservice that is being done to us. Thirdly, we have the drugs industry we mentioned earlier. There is an irrefutable link, curiously ignored, between dangerous, mind-altering psychotropic drugs that are - 264 -


The Worm in the Apple by Stephen Cook completely legal and the street drugs black market in psychotropic drugs, almost all of which established a foothold in the society as legal prescription drugs. It is a link that is obvious when one looks and is very easy to demonstrate. It is something which the media could easily expose if it were really motivated by service to the human community. Similarly the media, which so loves a scandal or lurid headline, could have a field day with the marked tendency of so many legal drugs to produce physical complications, behavioral aberrations, harmful side effects and dependency. And the irresponsibility of the drugs giants in testing their products and ensuring they are safe for human consumption is a horror story just begging for the attention of a real investigative journalist. A great deal of energy is directed at "dealing with" with the street drug problem but the street drug problem, big as it is, is a symptom or by-product of something far more vicious: the efforts of psychiatry and the pharmaceutical industry in alliance to create a drug oriented and drug-dependent culture. Governments do virtually nothing to protect their people from the wholesale marketing of a vast array of lethal substances and generally leave the drugs industry to police itself, which is about as daft as putting the Mafia in charge of security arrangements. The drugging of our populations is clearly a problem that not only has not been rectified but has been allowed to grow steadily worse. It is not that the problem cannot be resolved; it is more that there little willingness or drive on the part of the powers that be to resolve it or to support those people and organizations that can resolve it. Drugged populations are debilitated populations. Drugging people lowers their IQ and impairs their ability to think, feel, learn and respond rationally. This is the result that is being achieved. In so far as it has been achieved so consistently and for so long, we can only conclude that this is the result that has been sought. As we suggested earlier, we judge people not by what they say, but by what they do. If we stop listening to the PR and start looking at the results we again see clearly that, words aside, the game is being played for the benefit of someone. But that someone does not include the likes of you or me. And it never will. We need a better game.

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CONCLUSION

This then, in brief, has been a sketch of globalization. It is the globalization of poverty and debt. It is the sly parasitism of a covert global aristocracy imposed upon the rest of us so we have not known until now how to fight back or even how to identify our oppressors and their methods. The mechanism of debt-money delivers power over governments into the hands of the financial elite and the giant multinationals with which they are interwoven. On planet Earth at this time, international money power overrides sovereignty, nullifies democracy, robs human rights of any mechanism by which they can be effectively expressed and asserted, creates a financial reality at variance with and senior to physical reality. At the very time technology is able to deliver for humanity the potential for unprecedented levels of prosperity, the global economy is plunged into decline. The system is not sustainable, yet those who gain power and supremacy from it will endeavor to keep it going come what may, regardless of how many millions it kills. The global power of the banking/corporate alliance, which is now so sure of its supremacy that it openly touts the notion of "world governance" of the people by the financial elite. The empire of the financial elite is built upon fraud and depends upon the rest of us remaining ignorant of it. Without our continuing acceptance of it, without the willingness of our governments to continue leaving the job of money creation to the banking sector, the fraud cannot survive. Third World debt and globalization derive from a single idiocy in the creation of money itself and when we understand this we can begin to glimpse how easily all this misery and injustice can be dispensed with forever. The future is in your hands. If you want it to be very bleak indeed, leave things as they are. If you want to see this whole sorry mess straightened out, insist that your government restores unto itself, on your behalf, the sole duty of creating all the money required by your economy for smooth exchange to occur between producer and consumer. And insist that it spends that money into the economy, never lends it. But to make their demands impinge, honest men will have to speak with one voice through a broad, united and determined grass roots movement. Quickly. And do not take "no" for an answer - 266 -


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CHAPTER FIVE

Saving the Earth a pro-survival money system

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THE HIDDEN INFLUENCE

Thousands of excellent books have been written and eloquent speeches made on Mankind's problems with the planetary environment and there is no need for me to reiterate here what has been so ably said by others. In fact, the purpose of this chapter is to look at the problem from a new angle. There has never been a time when the complex workings of the environment have been better understood. That we "need to do something about it" has as close to global consensus as any idea has ever had: it unites almost everyone in commonly held concern for our collective futures. Concerned citizens from every walk of life and every nation are galvanised to press for effective action that will resolve the very real threat to our survival posed by the prospect of a collapse of Earth's life-support systems. Why then, despite all this, does the situation continue to get worse? When a situation gets worse, something has caused it to get worse. If that situation continues to get worse despite efforts to stop it getting worse, or even make it get better, then whatever is making it get worse has not really been identified and eradicated. Logic also tells us that if many people are all pushing in one direction, yet the situation moves in a contrary direction, someone or something is pushing even harder in that contrary direction. That something, as you have probably gathered by now, is the money scarcity created by the debt-based money system we have been conned into enduring.

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CAN'T AFFORD TO DO IT, CAN'T AFFORD NOT TO

We cannot in any sense or by any stretch of the imagination afford not to arrest and reverse the decline of our life-support system. If we don't we'll die. Simple. It is a pretty black or white situation: handle the environment and live or neglect to handle the environment and die. Yet "the system" is somehow inherently resistant to anything effective getting done, as evinced by the fact that no overall improvement in the situation has yet occurred. Indeed, there appears from some quarters to be a determined effort to introduce more threats to the environment than already exist, the advent of GMOs being a case in point. There is no difficulty obtaining agreement that we should do this and we should do that but when it comes to actually doing something that gets a real result.....problem, problem, problem. The common denominator of that problem, problem, problem is the economics of the situation. As soon as one contemplates re-organising human activity so that it ceases to wreck the environment, financial realities rear up with problems of money-flow, viability, profitability, employment, balance of trade and so on that appear to render organizational and technological solutions at best incredibly difficult, at worst impossible to implement. The barriers to cleaning up our act are not technological ones: they are economic ones. We have an economic system that impedes or inhibits our efforts to guarantee our own survival. For example, we know how to husband the land properly and produce uncontaminated food but to a large extent we don't do it. Why? Factory-farming methods that use pesticides and chemicals, which utilize the land inefficiently and even destroy it, while producing low quality and often actually harmful food, are financially more viable. The kind of agriculture we have and the kind of food we eat are determined by economic priorities, not technical ability, what is best for Man or even the long term viability of the land itself. What makes financial sense cannot be ignored if one wishes to continue to make a living but it so often overrides what is just plain sensible- what makes sense 270


The Worm in the Apple by Stephen Cook according to financial “reality� doesn’t make sense according to physical universe reality. There is a financial straight-jacket that frequently impairs Man's ability to re-organize along lines that will ensure his continued ability to live and prevents or impedes the wiser deployment of technology. For instance, we need to produce goods that are of higher quality and more durable but they cost more to produce and few can afford to buy them; companies depend upon built-in obsolescence to create repeat sales that are essential for continued solvency; a switch from mass production to more localised industry would be kinder on people but companies depend for their financial survival upon being able to churn out goods in volume; measures to switch to safer fuel sources, recycle waste, reduce emissions and a thousand other technically feasible methods of sparing the planet the ravages of our own effluents run aground on reefs of finance, profitability, expense and money scarcity. Jobs, livelihoods and futures are in jeopardy the moment one takes one's foot off the gas even for a second in the relentless high-speed chase for market share, solvency or even enough cash to pay this week's bills, taxes and instalments on one's debts. Someone else, some other business, some other region, industry or national economy might be able to carry the extra cost of a sensible change in our modus operandi, but we can't. We are trying to survive financially and while we heartily approve of the idea of safeguarding the environment for ourselves and our children, we are on a carousel that we can't get off, so let someone else take the initiative and maybe we'll join in later. All the resolutions, good intentions and agreements that "something must be done about it" run aground on the same reef: financial "reality". Re-organisation of human activity is expensive in financial terms, while not making the needed reform is expensive in every other sense.

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ECONOMICS AND REALITY IN CONFLICT

What is sensible according to the rules of the game called "economics" conflicts with what is sensible in terms of the human race actually surviving! As we try to address problems of the environment we become entangled in morass of economic problems which threaten the continued ability to function of governments and businesses. Yet, if we seek to keep the wheels of industry turning, productive enterprise in a condition of healthy solvency and millions of people in employment we, apparently, must continue to wreck the environment! The purpose of an economic system is to facilitate the creation and distribution by Man, in co-action with his fellows, of an abundance of those activities and material things required for optimum survival and the resolution of problems he encounters in that regard. There is hardly any point in an economic system doing anything else. An economic system is supposed to serve Man's interests. A functioning global lifesupport system, healthy food and the efficient broad distribution of the fruits of high technological capability would seem pretty high on that list of interests. An economic system which obstructs, impedes or renders "impossible" the resolution of fundamental problems of survival, when the technical means to solve them exists, has something seriously wrong with it. It has become crippled somehow in its ability to operate in the service of Man's needs. This is precisely the situation with our modern, global economic system. We human beings have erected an economic vehicle which (a) stutters and stalls and will only steer in the direction of the cliff-edge and (b) threatens to seize up completely the moment we try to steer it away from the cliff-edge. If it were a car we would soon be looking for something better built. Or maybe we could fix it so it takes us where we want to go with no more trouble than needed to make the journey interesting rather than a hair-raising dice with death.

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THE ECONOMIC SYSTEM INTRODUCES CONTRA-SURVIVAL FACTORS

To the degree that there are unwanted conditions such as poverty, hunger, conflict, criminality, injustice and so on, Man falls away from optimum or even adequate levels of survival. To the degree that such unwanted conditions are eradicated, Man moves towards optimum survival. Our chapters showed, in part at least, how the present global economic system, far from facilitating our efforts to reduce such contra-survival conditions, is actively facilitating their increase, despite this being an age of technical brilliance possessing the consequent potential for unprecedented abundance. It would be difficult to think up an economic system more inadequate than the one we have and there is no real reason we should not change it, unless one is worried about upsetting a few bankers. In actual fact, we do not have any choice but to change it if we wish to survive. Changing would not even that difficult in principle - a darn sight easier in fact than trying to soldier on with an outmoded eighteenth century money system that wasn't even any good in the eighteenth century! None of what is being said here absolves the polluters, exploiters and plunderers from their personal responsibility for what they do, nor government from its failure to do its job. The greedy and selfish are not helpless victims forced to do what they do by the mechanics of the money system. However, our cranky, debt-based money system creates a game in which a particular type of commercial animal is rewarded and tends to win. It favours the emergence of ruthless, exploitative and irresponsible economic entities - within whose hierarchies, naturally, particularly ruthless people are best fitted to rise to prominence. Even those of more benign disposition find that they must ape such behaviour if they wish to get anywhere at all in a game played out in a field of intense commercial warfare, in which justice, ethics or integrity score few points and it has become almost impossible to be rich and entirely honest. There are two underlying contra-survival factors introduced by our badly conceived money system: the mechanics of debt money itself, upon which is erected an economy with a design fault that renders it unable to respond in anything but a crippled, distorted fashion to human need; and the empowerment of suppressive, criminal individuals. The latter is hardly surprising because it was suppressive, criminal individuals who first conned humanity into it so as to further their suppressive, criminal aims.

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The Worm in the Apple by Stephen Cook The system was not conceived so as to further broad human survival. It was conceived as a mechanism to divert wealth and accrue power into the hands of those who control money or those in their favour. It has been a howling success in terms of its purpose: serving the goals of such an elite group of money men. But if civilization fails or even the ability of the planet to support human life fails, that elite group too will perish, so ultimately it does not serve them either. Those who have the power, however derived, to make the rules, assign objectives, influence events and nullify the efforts and objectives of those not in agreement with their own aims, shape the world in which we live, for good or ill. Where such people are not particularly benign or sane, then God help the rest of us. Humanity is not short of good people. They outnumber the bad by a huge margin. But they don't happen to control the money supply and so cannot impinge upon the civilization sufficiently to shape it. If we take an overview of this planet and of humanity at this time, the condition of human societies, the condition of our economies, the condition of international relations and most importantly the condition of the environment itself, we see that Man's survival is precarious. We need a speedy resolution of the problem. Such a resolution is technically and organizationally possible. But it isn't happening and things continue to deteriorate. There's an obstacle in the way.

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JUST HOW BADLY DOES THE SYSTEM WORK?

It is difficult to gain a true perspective on just how poorly the debt-money system has served us because the picture has been partly clouded by the very real gains of our technological advance. If we ignore the desperate plight of the growing majority of the world's people and take as our yardstick of success the abundance of mobile phones, cars, shoes, plentiful food and television sets that people of the developed world now take for granted, then many see this as evidence that the planet's dominant economic system is delivering the goods. The privileged minority of Earth's population may well have mobile phones but the air has less oxygen in it and far more toxins than it used to and as everyone needs air to breathe, everyone is poorer. We all have cars but thanks to modern farming methods the Earth loses fertile land areas the size of Canada every year. We all have TV sets through which to watch with trepidation the catastrophic effect of climate changes - and for millions those TV sets sit in the middle of shanties with no sanitation. American citizens struggle with obesity because their diet is so poor and three quarters of the world's population struggle with hunger because their diet is even poorer. Modern surgery enables a few of us to remove the cancers caused by radiation and other contaminations. We drink fizzy drinks while the global water supply is gradually poisoned......... In terms of the raw basic of human survival, this is catastrophe deceptively wrapped in gaudy packaging.

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A FAILURE OF OUR ECONOMICS, NOT OUR TECHNOLOGY

While the glitter of technological achievement to some degree obscures the deficiencies of a dangerously inefficient economic system, that economic inefficiency has greatly restricted the ability of technology to serve Man to its full potential. This becomes evident if we compare what we are producing with what our technology makes us capable of producing and consider the full range of just what do we need for a decent, sustainable existence. Technological know-how is a human success story. It is a highly advanced tool-kit that provides the possibility of material abundance for all of the world's people. But any tool-kit is only as good as the use to which it is put, which aspects of it are favored and which neglected, what problems it is employed to solve, what goals, pressing needs and wants it serves, and how and to what extent its benefits are distributed. The entire shape and orientation of material technology is governed by the economic system in which it is employed. By way of example we have the automobile. Technological know-how provides us with a broad spectrum of choice as to how we will build automobiles. At the lower end of that spectrum lies the option to bulk-produce automobiles with a minimum of creative human involvement. We can churn out cheaply made vehicles that wear out in a few years, that run on gasoline and pollute the environment in the process, and which we can easily replace with another bulk-produced vehicle. We employ this modus operandi not just to automobiles but to almost everything we produce. It's one way of doing things. At the other end of the spectrum lies the ability to produce a beautifully crafted machine that will last a life-time and can be run on any number of cleaner, less wasteful fuels than gasoline and, when it does eventually wear out, can be recycled and virtually all its materials used to beautifully craft another one. We can do that, technically, and it is a better modus operandi on many counts: aesthetic, spiritual, social and environmental. But by and large we don't. Many possibilities for the nature and orientation of our production lie between the two extremes offered by the current state of our technology. Yet it is at the former rather than the latter end of the spectrum that human productive activity currently almost invariably operates. It is not limitations of knowledge or technical know-how that keep it there. Nor is it the overwhelming popularity of samey, short-lived, badly made junk that has to be remade over and over again. Technology could do a good deal more than we ask of it but for some reason we rarely ask. There is a wide discrepancy between what we 276


The Worm in the Apple by Stephen Cook can do and what we are presently doing. We have become so used to a particular harnessing of technology that our expectations have become low. And we are fooled by appearances. We see the beautiful, bright, shiny cars and miss the fact that they wear out in five years where they could, if we wished them to, last fifty. We see the brightly packaged foods on the supermarket shelves and, ignoring the fact that a majority of our fellow human beings are getting hungrier, perceive abundance. We see mobile phones and DVD players and a host of geegaws and gizmos and think that surely, we must be doing pretty well. There's nothing wrong with mobile phones, DVD players and geegaws and they are pluses on the scoreboard of human achievement, but it is a mistake to not then notice the minuses. It is rather like seeing a man wearing an expensive state-of-theart wrist watch and deciding "he's doing pretty well for himself" and completely missing the fact that his wife is in rehab, the Mafia have a contract out on him and he's smoking himself into an early grave. And the wrist watch is a cheap imitation in any case. The brightly packaged food so abundantly displayed on the supermarket shelves is in fact so contaminated and so depleted in nutritional value that "well-fed" westerners are on covertly depleted or even spiked rations. Everyone has a cheaply produced mobile phone, undoubtedly a triumph of microelectronic engineering, but at the same time we have thousands of toxic chemicals in our bodies. We have advanced dentistry to correct the damage done by poor diet. We have sophisticated sun creams to protect us from the ultra-violet that breaches a depleted ozone layer. We take holidays by polluted oceans, use advanced technology to combat escalating crime and take refuge in TV because real life is too drab or too stressful to be lived. The intent here is not to make nothing of what we have achieved. Our achievements and advances are many but a workable economic system that enables those achievements to be maximally realized, broadly shared and truly enjoyed isn't one of them. Civilization has a huge camouflaged hole in it: and that is economics.

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INEPT ECONOMICS

If we look over the distortions placed upon Man's endeavour to produce and exchange the things he needs and wants for optimum survival by using as his medium of exchange the currency of debt, it becomes clear why he is systematically wrecking his own planet. It also becomes clear that he doesn't need to wreck it and he doesn't need to make sacrifices in order to avoid wrecking it either. A wrecked planet is not the inevitable outcome of technological advance, it is the inevitable outcome of technological advance harnessed to the service of a backward economic system. In fact, the wonder of all this is that the route to taking good care of our planet runs in the opposite direction to "doing without" the benefits of technology or making sacrifices: it is also the route to greater prosperity across the boards. The key to understanding this is to understand exactly how an inept money system deflects economic activity towards an emphasis upon quantity to the virtual exclusion of quality, upon incredibly inefficient over-production, over-transportation and the feverish, endlessly repeated manufacture of junk. Underlying these symptoms lies a crippling of the mechanism by which the full spectrum of human need can be expressed and the provision of the full spectrum of human need rewarded. And underlying that sits the hidden cause: a severe shortage of real money and a vast surplus of debt.

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DEBT

We have seen how almost all the money in a modern economy is now created by the banking sector as interest-bearing loans. The present money system obliges people, businesses and governments to borrow into existence their own means of exchange. Money cannot exist without someone carrying the debt which created it. Wealth cannot flow smoothly between the participants in an act of exchange because each time a certain amount of that wealth is deflected into the possession of a nonparticipating, non-contributing third party: the banking sector. As we saw earlier, Commercial warfare, the intense competition to capture scarce consumer spending power and the remorseless rise in costs places industry under an unrelenting pressure to reduce costs. But no matter how much it succeeds in so doing, it is locked into a money system where it can never cut costs enough! No matter how much industry as a whole manages to reduce costs, the basic problem of shortfall will remain. "Reducing costs" means reducing the amount of money industry spends in the process of producing its products or providing its services: in other words, reducing the amount of money it distributes and which will become available to the consumer as spending power. The effort to reduce costs always leads to further necessity to reduce costs and industry is caught on a downward spiral from which it cannot escape. If the producer does not reduce costs, he swiftly becomes uncompetitive, and perishes. He can perish rather rapidly in a climate where money can never be in sufficient supply, competition is ferocious, margins tight, the consumer perpetually sees the goods on offer as "too expensive," debts are secured against assets, the lenders of bogus money remorseless in their demand for interest payments and the pressure never to yield an inch of market share is relentless. How do producers attempt to cut costs so that their prices can be reduced to a level where consumers can be persuaded to part with their too-scarce spending power? Debt repayment is usually an inflexible cost that simply must be met as repayments become due because the penalties attendant upon a failure to do so are foreclosure, bankruptcy and repossession. Other costs however provide scope for reduction, albeit at a price. A business can reduce labour costs by increased mechanisation and mass production. In other words it can shed human labour. But what happens to that shed 279


The Worm in the Apple by Stephen Cook labour? It either does not work, so does not earn an income and thereby reduces demand, or it finds new work. Industry can attempt to reduce the amount of wages it pays out to its employees by resisting wage demands. In an economy in which there is job scarcity or weak union representation and where inadequate spending power can be disguised by consumer borrowing, it may to some extent be able to do so. Unfortunately this "success" will again reduce distributed incomes and suppress the ability of the consumer to buy and industry to sell. In fact, what industry requires is what it is unable to do: increase the distribution of wages so as to flow more income to the consumer that will enable more sales to be achieved. Industry can also try to reduce the cost of production by reducing the quality of its product. The harnessing of technological know-how to bulk/mass production plays a part in this endeavour, along with a reduction in the quality of components and materials used, cost-saving short-cuts in the production process and a less than assiduous attention to environmental safeguards. Bulk production enables producers to reduce the cost of production and to hold down prices by accepting as tiny a profit as possible on each item produced. But bulk production requires a massive marketing drive so as to create bulk sales. That drive occurs in the context of a market place where normal competition has been supplanted by something akin to warfare in everything but the use of live ammunition, in which everyone else is also feverishly seeking bulk sales. Marketing takes on the characteristics of a sustained assault upon the psyche of the consumer who is battered by its messages like a civilian caught in cross-fire. It becomes less a matter of discovering consumer need and supplying it but of seeking to instil in the consumer a want for or acceptance of what industry, within the straightjacket of a debt economy, is financially able to supply. Mass production and bulk sales have become an apparent key to survival although it is only a short-term appearance. Mass production may well have a role to play in the right economic context but here it is simply a question of how fast the wheels of industry can be made to turn because they can never turn fast enough. Mass production leads to more mass production because the underlying money scarcity is not addressed and resolved. A light bulb manufacturer, for instance, churns out light bulbs and markets and sells and sells and sells with ever greater ferocity, an effort driven forward by the continual upward drift of costs and erosion of consumer ability to buy. The decreased quality and durability of the light bulb he produces becomes a positive factor in his favour. If light bulbs last less long before they wear out, the 280


The Worm in the Apple by Stephen Cook consumer must return more frequently to replace them, which assists the company in its drive to crowbar as much money as possible out of the consumer's wallet. These factors combine to further suppress any desire or instinct the producer may have towards the quality and durability of what he produces. A light bulb that could be built to last ten or twenty years lasts two before it must be replaced. The life-time of one bulb becomes the life-times of ten. In the space of twenty years the consumer pays for ten inferior bulbs where he might have paid for one superior bulb. And when he buys an inferior bulb he does not pay a tenth of the cost either so the cost to him of having light in his dining room for twenty years is multiplied many times. As this erosion of quality occurs over time he becomes used to the fact that "light bulbs last two years" and no longer feels that he is being done. The unnecessary endless remaking and repeated transportation, as it were, of the same bulb, or indeed any one of a host of products, involves an obvious waste and overconsumption of materials, fuel, human labor, disposal of waste products, transportation and virtually anything one can think of. When we see that this pressure afflicts the economy as a whole, insinuating itself insidiously into the production of every conceivable product, it is little wonder that we have problems with pollution and the rapacious over-consumption of the world's resources. It is little wonder, too, that human beings feel unhappy, anxious, bewildered and used. Our light bulb manufacturer may be able and may desire to make a light bulb that lasts twenty years but the increased care and quality required in manufacture will push up his costs, something which is very difficult when producers are already struggling to capture sufficient money from the consumer to cover existing levels of cost. The consumer may desire a high quality light bulb, high quality car, high quality house, high quality food and it is clearly better survival for humanity that he gets them. But his spending power is spread very thinly across the range of goods available – which, while remorseless marketing tells him he must have them, his pocket tells him, by and large, that he can't have them. The widening gap between costs and spending power pushes productive effort and consumer demand in the direction of reduced quality: it obliges the consumer to buy cheap and the producer to sell cheap.

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TRANSPORT

The drive to mass produce, mass market and sell in the greatest possible volume drives producers to hunt ever further afar for sales. They seek to capture the spending power of consumers in markets that are increasingly more distant. In other words they move into and invade the local markets of other producers. At the same time they find their own home markets invaded by distant competitors attempting to do exactly the same thing. Marketing and distribution become extended thinly over increasing greater areas. Producers discover they can no longer depend upon a local density of sales in their home areas, which are continually under invasion by more distant competitors. As a result, we witness one of the most glaring marks of the inherent inefficiency of the system: the phenomenon of nearly identical products whizzing this way and that across entire regions or even the entire globe. A refrigerator made in Germany is transported half across Europe to be sold in England on the doorstep of English producers of refrigerators who sell their own almost identical refrigerators in Germany. And both the British and German governments are forbidden by their money masters from doing something which is very much needed in a debt-economy: taking steps to protect their home markets from invasion. Local producers and suppliers, small businesses and new businesses starting small find it increasingly difficult to establish a stable hold upon their natural home markets because those markets are continually under invasion by or occupied by distant large-scale mass-producers. Localized, small-scale production capable of the efficient supply of and greater atunement to the needs of local markets, however desirable, becomes unfairly disadvantaged by the slope of the playing field of the debt economy. Distant marketing, distant sales, distant supply, distant after-sales, servicing and repair, town-to-town, region-to-region, nation-to-nation and continent-to-continent require the transportation of people and goods. In fact, the ability and willingness to transport across long distances becomes a weapon in this war to capture and hold distant markets. He who can out-transport the other will ultimately win the war, another important factor contributing to the global dominance of the mighty corporations with their massive resources. 282


The Worm in the Apple by Stephen Cook Under this insanely inefficient system for distributing created wealth, over-extensive, endlessly duplicated transportation burgeons. It becomes a growth industry in its own right as it fulfils an exploding demand. The skies and sea-lanes become needlessly crowded and the roads and city streets become clogged. Even here the cost-cutting pressure is felt: roads are endlessly repaired and rerepaired, rail safety is jeopardised as maintenance and training are minimized, cars are made without the "luxury" of catalytic converters and giant oil-laden tankers play Russian Roulette with the environment. Attempts to increase the capacity of roads and other transport systems so as to meet the escalating demands placed upon them merely further facilitate this in-built trend towards over-transportation: the sea-lanes become crowded with bigger and bigger ships, the airways with bigger and bigger planes and widened highways swiftly become clogged again. This over-transportation impacts upon the environment in ways of which we are all aware. If we wish to change or reverse the trend, we must first eradicate that which drives it forward.

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ECONOMIC GROWTH

Modern economic growth is debt-driven. It is as the weeks, months and years pass manifestly driven less and less by human need. When we examine what kind of growth is involved we see that "growth" has become equated with activity. As long as more activity occurs, regardless of what it is, how useful it is, where it leads or what its consequences are, then it is growth. If we produce a light bulb well so that it lasts twenty years and then produce it less well so that it last two years, we are then producing and selling ten bulbs for every one bulb we produced and sold before. So that is growth. We build a juggernaut to transport apples from England to Turkey and another juggernaut to transport Turkish apples to England, with all the waste of natural resources and pollution of the environment that involves. This is inefficiency but we call it growth and decide it is a Good Thing. It isn't a good thing at all! Nor is the reckless plunder of resources, nor fouling the air with multiplying exhaust emissions, nor the use of chemicals to slow down natural decay during transportation and storage. As long as there is increased activity, increased quantity, there is growth. The planet can be dying, people unhappy and our right to breathe in jeopardy but we still have "growth." There is no allied concept of the quality and overall viability of that activity, no yardstick by which good or bad can be measured. When we understand that an economy is supposed to serve human need and is supposed to enhance the long-term survival of the people in it, we can see that what we have come to view as "growth" is at best a mutated growth, inherent ill-health camouflaged by size. We are suffering a hidden decline of true economic activity because maximum human well-being and possibility for sustained survival is the end-product towards which economic activity should be directed. We are not approaching that endproduct, we are falling away from it. How then can we gauge true economic growth? True economic growth is evinced by an observable, tangible increase in overall human well-being and a factual improvement in all factors necessary for long-term human survival. None of the factors most noticeable in the debt economy promote human survival, they harm it.

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The Worm in the Apple by Stephen Cook Cheapness, escalating debt, over-frantic activity, the economic unviability of taking care of - as opposed to plundering - the planet, perpetual cost-cutting, overtransportation and the enslaving both of Man-the-producer and Man-the-consumer and his technological know-how to those ends are absolutely vital to the continuation of a debt-money system. We cannot sustain survival with these factors present as day-to-day realities. Yet the debt-money system requires them.

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DEPENDENCY ON EXPORTS AND INWARD INVESTMENT

The chronic money shortage renders nations hungry for money injected into the economy by foreign sources of investment (banks, multi-nationals and other sources of capital) and the proceeds from exports. In an effort to achieve solvency, nations attempt to export more than they import and so create a net inflow of money. Clearly though, for one nation to become a net exporter some other nation or nations must become net importers of that nation's exports. But all nations are attempting to become net exporters, something which all nations simply cannot do and so nations are thrown into intense competition with one another in which the determination to export to keep the economy alive is profound becomes ferocious. This competition takes place within the context of a global debt-money system, placing nations as they attempt to produce and sell on the world markets, in much the same position as any producer competing for perpetually scarce money. Nations then are not attempting to do the logical thing: produce themselves as much of their needs as possible and trade surpluses for what they cannot produce; that is, to trade for mutual benefit and with an overall balance of trade, a situation in which each nation has a vested interest in the health of its trading partners. They are instead trying to a marked degree to utilise resources to produce not for their own consumption but for the consumption of the people of other nations, to forbear from consuming their own production and to export as much of it as possible to other nations. In effect all nations require other nations to maximise imports and minimise exports, in other words each has vested interest in the ill-health of its trading partners. T his of course is nuts because nation A is only in a position to buy nation B's exports by virtue of having something to buy them with, that is by producing something which it can offer up for trade. At the same time, by trying to maximise the export of actual wealth created by its people and minimise the influx of wealth created by someone else's people, it is attempting to minimise the wealth of its own people! It is hardly surprising that national economies become lopsided, inefficient in the service of their own people and increasingly difficult to manage. And it is easy now to understand why global poverty levels rise, even in the Earth's richest nations, amid historically unprecedented capacity to create material wealth. 286


The Worm in the Apple by Stephen Cook A nation's quest for "success" in this economic battlefield places her in a position of increasing subservience to the demands of her biggest sources of foreign revenue, her biggest exporters, and there develops a ruthlessness in protecting their interests on the part of that nation's government. Lose out in the international battle for market share, accept the position of net importer and the resultant exacerbated money shortage and you are sunk. Similarly, there exists a dangerous dependence upon the willingness of the international money powers to invest - a continual struggle to make one's nation attractive to international investors. But international investors are seeking to make money make money and to extract short-term profits from that investment and their needs and those of a nation's people frequently contradict one another.

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SUBSERVIENT GOVERNMENTS

Governments have rendered themselves subservient to a money elite, and thereby surrendered their freedom of decision and their ability to serve their populations. They have become increasingly subordinate to the giant multinationals and the banks which are able to hold them to ransom. It is the banks and multinationals who call the shots on the international markets and override the efforts of governments to protect the basic interests of their own populations. Governments consequently find themselves in a dilemma: they try to attend to the needs of their populations by sacrificing the needs of their population to an international financial elite, whose power to turn on and off the tap of money supply was handed to them by government! On the face of it, it appears ridiculous that any government, empowered by an electorate of millions, a sovereign entity in theory beholden to none but its electorate, can be so powerless to enact laws which protect its farmers, factory workers and miners or its lakes, rivers and air or indeed the genetic integrity of the food chain. How can it be that national governments display time and again such servility to the vested interests of a handful of internationals that they will recognise, ratify and enforce international agreements and treaties clearly to the detriment of their own citizenry and often just plain stupid? When, for instance, some food giant abrogates the copyright to seeds which India's farmers have been growing since time immemorial and are now "forbidden" to grow without permission, why does not the Indian government refuse to recognise such a violation of its own farmers' rights? Why did Indonesia have to give up the right to ban the mass export of its own timber and rattan so as to prevent the continued loss of its rainforests? Why did Canada have to accept that her sovereign right to conserve her own fish stocks were "illegal"? How come mighty Germany was prevented from banning the lethal chemical pentachlorophenol? How come Holland was prevented from exercising her sovereign right to protect her own environment by making catalytic converters compulsory and the United States from providing tax relief to cars using them?

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The Worm in the Apple by Stephen Cook And why was the US unable to restrict the use of cadmium in plastics or introduce controls on bottle sizes so as to encourage recycling? These are perfectly reasonable environmental measures enacted by elected governments empowered by entire populations to protect their own citizens - and in the long term the whole planet - yet they were overridden by "complaints," usually originated by international corporations or their proxies, that such measures were "restrictive of trade". Why, by way of further examples among many more, has the EU failed to control the emission of pollutants, the health of her rivers, eliminate PCBs, or conserve dangerously depleted fish stocks? Why are people, through their elected governments, unable simply to tell the clowns who object, in their own short-term interest, to their protecting the futures of their children to take a hike? And why, for that matter are environmental agreements made at international level so deliberately slack as to substitute woffle and gestures for any really effective action when the lives of millions of people ultimately depend upon effective action being taken? The reasons lie in the degree to which nations depend upon banks and multinationals for money supply and upon exports for survival. Rather than take effective self-determined action they must propitiate and appease their creditors.

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A GLARING OMISSION

One thing that is glaringly omitted from the global economy, or indeed national economies, at this time is any entity with the power or will to impartially set, insist upon and enforce standards of conduct in production and trade, with the health, happiness and ability to survive of people its overriding concern. As a result, we have an anarchy that grants licence to the unethical and the irresponsible, the criminal and the insane. Such a role would naturally fall to governments because surely the prime duty of government is to create for the millions of people it represents an environment conducive to their health, safety and happiness. Governments have become huge camouflaged holes, unable to discharge their duty because they are beholden to the very powers they ought to police. While those lawless powers can be accused of almost psychotic venality, governments can be accused of suicidal stupidity. All they have to do is create their own money as a service to their own economies and they will become free to serve their own people.

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THE UNITED STATES

As this article was being written there occurred, in Spring 2001, a timely illustration of the inherently corrupt nature of the system. US President George W. Bush, within weeks of coming to power, reneged upon the 1997 Kyoto treaty which would have cut the emission of greenhouse gases. This was a treaty to which many nations are signatories, which the US played a major part in creating and which was signed in apparent good faith by Bush's predecessor, Bill Clinton. This betrayal has understandably caused a storm of protest from every quarter, not least in the US itself because Americans too have no wish to die or watch their children die. The gutter-level ethics are obvious but a Whitehouse statement that "The Kyoto Treaty is not in the United States' economic best interest" demonstrates an almost moronic level of thinking. The United States produces 25% of the world's pollution (yet has only 4% of the world's population). Her cooperation in cutting greenhouse emissions is essential. If greenhouse gases continue to be pumped into the atmosphere then the atmosphere will warm up, the ice-caps melt and the seas rise. How can flood, storms, forest fires, loss of homes, fertile land, jobs and lives and a rise in sea level that will engulf great cities like New Orleans and Miami, and consign the Everglades to history, be in America's best interests? How can anyone not only not take action to protect us from such a future but actively sabotage efforts so to do? How nuts can a government get? This goes further than the possibility that Bush just wasn't very bright. Both he and his vice-President, Chaney, had deep ties with the "dirty end" of the oil industry and oil and coal interests poured money into their campaigns in expectation of the very return on their investment they then received. Bush's action to protect his money masters' short-term economic interests by sacrificing the medium and long term survival of millions of human beings may well be recorded by history as a crime against humanity. This mind-numbingly stupid decision clearly demonstrates the contradiction between economic logic and physical reality. In order for America to flourish economically, America and the rest of the planet must perish!

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The Worm in the Apple by Stephen Cook The money system has been sidetracked so far from the service of human need that the control of policy now rests in the hands of economic entities that regard human beings as cattle to be blithely sacrificed to "economic best interest." The US government is beholden to its oil and coal giants, to the money powers with which they are interwoven, to its life-or-death need to maintain export revenues, the fiscal context of inherent insolvency and the tightrope of incipient economic collapse that even the world's most prosperous (and paradoxically most insolvent) nation must walk.

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USING OUR LEGITIMATE FEARS TO CONTROL US

I think it was the Anarchist writer Michael Bakunin who pointed out that war is the health or strength of the state. In other words, it is when a state is at war with someone that its people can be expected to toe the line, make sacrifices, work harder for the "common good", put up with shortages of food and other essentials, shop the neighbourhood dissident to the secret police, deliver their own sons to shell and bullet and swallow the state's utterances relayed to them by a tightly controlled media. The money powers have contingency plans for the coming collapse of the world's fragile, frenetic economy. That collapse will be used - and the process is already underway - to persuade us to accept global governance and a global currency. A global army, built around US military power, will be used to police the globe and keep increasingly miserable populations from rising up and tearing the joint apart. Such a set-up, essential to the money powers if they are to maintain control of the system and keep their crimes covered up, will largely preclude the old control mechanism of a nice profitable war between nation states. As the economic situation worsens, which it will most assuredly, we will all experience a continual decline in living standards, the crumbling of infrastructure, the winding down of services, the erosion of the quality of goods, the economic enslavement of producer and consumer and the accumulation of wealth and power in a few hands. A suitably frightening external enemy will be needed to ensure our willingness to make sacrifices and upon which to blame those sacrifices so that the real culprit goes undetected. That enemy will be the environment itself. Legitimate concerns about the decline of the environment will be used to persuade populations of the necessity of "doing without", working harder for less, accepting unemployment and all the rest. We will be thoroughly convinced that the world's physical environment cannot sustain the comfort and prosperity of all but a small elite of privileged people. It will, naturally, be a lie, a con like the money system itself, but we will be bombarded by such a message through a mortgaged and subservient media. If however we adopt a workable money system allied to our own good will and extant technological know-how, we will be able to create for ourselves a decent, thriving civilization, which at the same time attends to care of the environment.

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The Worm in the Apple by Stephen Cook A good life for all men and a good environment for all men are not mutually exclusive. If they were, that would be tantamount to saying that a good life for all men is and always will be impossible. But a hopelessly inadequate money system conceived in the interests of a criminal financial elite will make it appear so.

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RESISTANCE: YOU CAN FEEL IT BUT NOT QUITE SEE IT

Earlier chapters briefly examined the mechanics of globalisation and the underlying workings of the dysfunctional debt-money system. It should now be clear that the quantitative growth imperative to which it is enslaved underlies the rapacious harm human industry does in almost every area of environmental concern. For a debt economy to survive, for the productive entities in it to remain solvent or at least able to service their debts, that rapaciousness simply has to continue. For millions of people to be able to secure some kind of job, their ticket to some share at least of the limited wealth the system does produce, it has to continue. And yet, for the planet to be able to continue to sustain life it must stop. And if the "growth" stops, industry faces bankruptcy and repossession and jobs will become scarcer than they already are. This is the catch 22 humanity faces and why the environmentalist will receive support from every quarter for his proposals, in every way except action. When it actually comes to doing something, everybody is hoping somebody else will do it because one thing they know for sure is: they have no leeway to take on the financial disadvantage involved. Industries and governments simply cannot afford financially to do what they absolutely must do in every other respect. The environmentalist is asking government, industry and the individual to put a stop to this insane rapacious growth, the very thing they cannot, in a debt economy, do. The problem for Man is not that he is unaware of the need to sort this out, nor that he is unwilling to sort this out or isn't fearful for his survival prospects. His problem is that he is in a trap and the trap is an economic system which does not function properly for reasons he does not yet understand. It is this factor which faces the humanitarian and environmentalist with an implacable resistance to his perfectly reasonable proposals, which he can feel but cannot quite see.

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HOW DO WE GET OUT OF THIS?

The source of the problem is the straight-jacket imposed by the debt-based economy with which we are trying to operate upon productive endeavour and upon our collective ability to respond to clear and present dangers. We are using debt as money and it does not work. As soon as we attempt to introduce environmental safeguards into the productive process or improve product quality, reduce excessive transportation or implement significant changes in the design of manufactured goods or fuel types and power sources, we run into the basic problem of the debt-money system. Money is dangerously scarce, and through borrowing we are already, in effect, spending in the present medium- or long-term future income. It is almost impossible for anyone to accommodate the additional cost of engaging in new activities directed at resolving problems of the environment. Even though the long-term cost may be less, even in financial terms, the immediate cost and the swiftness with which precariously balanced enterprise can become fatally insolvent forms an almost insurmountable fiscal barrier. We have little or no financial room in which to manoeuvre.

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MONEY WITHOUT DEBT

Now that we can see the underlying flaw to be the simultaneous creation of (greater) debt alongside and supporting the creation of money, it is obvious that the solution would be to create money without the attendant extraneous debt appended to it. When we look this over we begin to see how economic activity can be made to serve, as it should and must, the full spectrum of human need and that true growth the equitable distribution of an improving quality of material and social existence to all of humanity - can be achieved and the benefits of high technological capabilities universally enjoyed, without doing harm to the planet on which we live. Indeed, a safe material and social environment are components of human wealth and an assured future for ourselves and our children are part of the package for which we strive in that aggregate endeavour known as economic activity. The key to all this lies in establishing a properly functioning money system. For an understanding of this let us return to some fundamentals once more.

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PROPER MONEY

The function of money is to facilitate the exchange between people of goods and services. It has no other valid, ethical or pro-survival function. It is a system of tokens which we exchange back and forth in place of actual goods and services in the confidence that we can exchange those tokens for actual goods and services at any time. For our tokens to work smoothly, we simply have to ensure that there are enough of them in circulation so that exchange between people, between producer and consumer, can easily occur. Currently it is the banking sector which supplies the economy with all but a tiny portion of its money. It does so by lending that money to the economy and charging a toll for its temporary use, which is called interest. Such a system works very poorly as a money system, distorts the economy and sabotages humanity's efforts to produce. Its only value is to those who create and lend money in that it enables them to accumulate wealth in exchange for no contribution to the sum total of humanity's wealth. Automated economic machinery has been erected which siphons off the wealth which others have created. The banks thereby accrue the rewards for contribution to the human team-effort that should have gone to real producers, leaving those real producers perpetually short-changed. If banks can create money, so can government. If banks can provide that newly created money to borrowers who then spend it into circulation, government can just as easily spend money into circulation or supply it to people who spend it into circulation. But government can do it as a public service. It does not need to make a profit from it. All it needs to do is cover, from taxes, the administrative costs of so doing, which are extremely minor. Indeed, so far as three percent of our money supply is concerned that is exactly what government does at the moment: it creates money and spends it, thus entering new money into the economy without at the same time entering a new debt. There is nothing to stop government satisfying all the economy's needs for a money supply in that way: that is, by increasing the three percent to one hundred percent. At present, the rate of supply of new money to the economy is regulated by raising or lowering interest rates, which is a crude mechanism for controlling the rate at which people borrow into circulation their own means of exchange by making it relatively "cheap" or expensive so to do. The inherently punitive and unjust nature of such a device so far as productive people are concerned is discussed in elsewhere but what 298


The Worm in the Apple by Stephen Cook it boils down to is: shall we penalise people for requiring a means of exchange or shall we penalise them more severely? In order for a decision as to interest rate levels to be made, the economy must be, and is, continually monitored, particularly with regard to wage and price levels, so as to ascertain whether "too much money" is being supplied to the economy. The basic idea is that if the economy is undersupplied with money, a money scarcity occurs, prices and wages are forced down and the economy goes into recession. If on the other hand it is oversupplied with money, if the rate of increase in money supply outpaces the rate of economic growth, we incur a situation in which there is "too much money" about: wages and prices tend to rise, the value of money declines and we have inflation. In the context of an economy where bogus (debt) money is being used as the means of exchange these principles are inherently flawed and cause no end of trouble again, particularly to honest producers - and this is also discussed elsewhere. However, if the economy can be monitored and its growth and consequent requirement for money supply ascertained with a reasonable degree of accuracy now, then under a reformed system in which government, rather than banks, creates and circulates the money supply, the economy's need for money can also be measured. An over-supply of money will show up as rising prices and wages and, most importantly, a decline in the value of money: money will buy less. There is no reason to suppose that money supply cannot be monitored and regulated under a debt-free system, at least as well as it is at the moment. Indeed, as a reformed system will be simpler and less complex, its controls of money supply more direct, there would be no excuse for it not being done considerably better than it is at the moment. The big difference however is that once the sums are done, the requisite amount of new money injected into the economy will arrive debt-free as it is spent into the economy by government on whatever government has as mandate to spend it on. No-one will be required to shoulder a debt so that this can occur. Government will, in effect, have a new debt- and tax-free source of revenue to spend. This is worthy of more detailed discussion but considerations of space dictate that we look this over briefly just from an environmental point of view. It opens up the possibility of an entirely new form of economic growth, once the debt imperative is removed, of growth driven by quality.

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QUALITY-DRIVEN GROWTH

Let us imagine that we wish to improve the quality of what we produce, to make our products safer, cleaner and more durable and to incorporate into the production process all necessary safeguards for the environment. Perhaps too we wish to relocate and decentralise industries or make feasible changes to fuel or energy use or increase the re-cycling of waste products and so on. That is expensive, obviously. Under the existing system the added cost of such an upgrade is passed on to the consumer through a rise in prices. Generally speaking, the consumer will be less able to buy the now more expensive produce, unless there is a commensurate rise in the amount of money in his possession with which to pay for it. In theory, as industry spends more on production, it distributes to the consumer the extra money required but as we have seen, all the money does not reach the consumer's pocket as debts are repaid and so deflect money to the banking sector. That money is only then recycled back into the economy by the banking sector as new loans, which increase the debt burden and deflect even more money to the banking sector. The expenditure of additional human labour, expertise and general productive activity invested in such an upgrade involves an increase in production. The increase of quality in things produced in other words is an economic growth. It is however growth that does not incorporate greater waste of Earth's resources or damage to the environment but is growth involved in efforts to conserve resources and protect the environment. It is growth which involves not necessarily an increase in the numbers of things produced but an improvement of their quality. The introduction of new activities engaged in the implementation of measures to protect the environment, be those measures the manufacture of catalytic converters, new plants for recycling waste, converting cars to gas, building eco-friendly houses, designing and installing filters for factory chimneys, converting farms to organic methods or developing hydrogen/oxygen power are also an increase of production. As improved goods change hands, increased wealth is changing hands. For example, when person A buys from person B a kettle made to a particular standard, a certain amount of material wealth created by A, passes to B. If that kettle is twice as durable, works twice as efficiently and never needs repair, then an increased wealth is changing hands, albeit in the form of a single kettle. It is, finally, growth that 300


The Worm in the Apple by Stephen Cook makes complete sense in terms of an economy's ultimate purpose: the improvement of Man's ability to survive. An increase in production, economic growth, whatever its nature, requires a commensurate increase in the money supply. In the debt economy, any attempt to increase the borrowed money supply to match increased production or make increased production possible, widens the gap between prices and consumer spending power. Improved production remains something the consumer "cannot afford" and involves extra costs industry cannot fully recoup and so over time drives industry as a whole deeper into insolvency and debt. However, as soon as we switch to a debt-free money supply it is a different matter altogether. In order to encourage or facilitate increased production - economic growth government simply prints and spends into the economy via tax reductions, grants, increased pensions, public works, direct construction programmes or however government wishes to spend money into circulation, the extra money required. That money requires no debt to be undertaken by anyone. For the government it is totally new debt- and tax-free revenue. It circulates and winds up as spending power in the pockets of consumers. Industry discovers that there is now "more money about" with which its "more expensive," improved, environmentally friendly produce can be purchased. This opens the door to government performing a positive role by enacting measures which encourage or demand of industry improved quality and environmental responsibility while releasing into the system enough debt-free money for the increased exchange of real wealth to occur. Price rises which result from greater quality of product are not evidence of inflation to the degree that they reflect the cost of an increase in production. The introduction by government of extra money into the economy will not be inflationary so long as it matches an increased production. To get an idea of this, imagine two loaves of bread: one is a cheaply made loaf baked using low quality flour and containing littler nutritional value. The other is an organic, wholemeal loaf with high nutritional content. The latter is more expensive than the former because its creation requires a greater level of production and it represents greater wealth. Supposing one day the entire population decided they did not want the cheap junk loaf and only wanted to buy the better quality loaf because it is better for their health and the high quality loaf was available in plenty of supply? A slight rise in the amount of money in the economy in line with the increased production now being exchanged would incur no inflation. The purchasing power of money can be kept stable (no inflation or deflation) if government is astute in monitoring the rise or fall of economic activity and releasing 301


The Worm in the Apple by Stephen Cook money or withdrawing money so that changes in money supply are commensurate with it. In fact, the constancy of purchasing power of the currency would be government's main indicator. If the value of money starts to go down, it has released too much money into the system and so needs to either increase production or remove money from the system. If the value of money begins to rise, and industry experiences a squeeze on its ability to sell what it produces, money supply has lagged behind production levels and needs to be corrected by an increase in money supply. As we pointed out earlier, correcting abuses of the environment means eliminating waste, over production of junk, farming that harms both the land and the human body, short-cuts, commercial conflict, doing one another in, grossly inefficient distribution and a failure to utilise our considerable technological know-how to its full potential. Eliminating these things does not involve sacrifice or a universal drop in living standards. It involves the curtailment of sacrifices we are already making, an overall improvement in the quality of life, an increase of real wealth, and a far more efficient distribution thereof. The goal is reached by adopting a correct money system that will ensure that the benefits of human labour are efficiently distributed among the producers thereof and their dependents. It involves ensuring that none of that produced wealth is hived off by parasitic groups of non-producers who regard the rest of us as chattels. It rewards Man, finally, for doing the right thing. How far could we go with this? What are the limits upon what we could do? The true limits are the availability of resources, manpower and technological capability and they are far higher than our current operating level. It makes no sense for scarcity of money to apply a limit well below our potential.

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SIMPLICITY

In essence, all this is very simple because money is simple, as a concept and in practical application. Complexity enters in only when trickery and deceit, misunderstanding and a desire to keep all this from public view become interwoven into economics. We have become accustomed to the complexity because it has been around for so long.

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THE FINAL INGREDIENT

An understanding of the corrupt money system is the final ingredient required for victory in the war to save our planetary home from destruction. The technology, understanding and will are already in place. We only need an economic system that allows those factors to be brought into play. This provides a platform from which those who campaign for a safe environment and the liberation of whole peoples from poverty and slavery can launch a campaign to which the oppressors of Man have no answer. A loud, wide and emphatic denunciation of the money scam will remove from under the enemies of Man the power base upon which they stand. Popular ignorance of what they are doing is their strength, exposure their Achilles' Heel. Remove that obstacle from your path and at last all your programs for reform will go in. Go out and win!

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The Worm in the Apple

CHAPTER SIX

Age of Prosperity Creating a Debt-free Future

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INTRODUCTION Understanding the mechanics of a catastrophically inept system enables us, at last, to see exactly how and why life is rendered needlessly wearisome for millions and downright untenable for millions more, and to realise just how bleak will be our prospects if we fail to grasp this particular nettle and halt our slide into the global economic abyss. On the plus side, understanding the cause of a problem opens the door to eliminating the problem. The questions we must ask ourselves are: is this astoundingly inept system really the best we can do? Is it really beyond the wit of man to work out something that serves him better? If Man can, within a few centuries, elevate his civilization from "everybody knows" that the Earth is flat to landing men on the Moon, or from treating ailments with leeches to advanced micro-surgery, then is he really incapable of supplanting the monetary equivalent of leeches and the flat-Earth theory with something smarter? The answer on all counts is an emphatic "no!" There are three interrelated reasons why the current system was not long ago abandoned as an utter failure and none involves any degree of workability. The first is that the only people who actually benefit from it, the international loan sharks and their cohorts, don't want it changed. The second is that just how appallingly badly it works in practice has been kept cleverly and thoroughly obscured and wrong reasons and wrong people blamed for the various economic and social disasters it has caused. If we imagine how the art of medicine might have lagged behind and ultimately undermined other attempts to advance had medieval leech farmers managed to protect their vested interests and suppress the deployment of more workable technology, we find a useful analogy of our current economic plight. Thirdly, people are willing to put up with the status quo because they assume that what we've got is the best we can hope for; and they make that assumption because in their experience thus far nobody has ever put a more workable alternative forward for their consideration. However, there is a rational and desirable alternative to a money system run for the sole benefit of the international loan sharks and the agonized detriment of everyone else. All that is now required is the willingness to use it. This brings us to the other, brighter side of the Monetary Reform (MR) coin: when we examine the possibilities presented by the implementation of a true money system rather than the elaborate system of usury that masquerades as a money system, we discover that our prospects for stability, prosperity and monetary justice are remarkably rosy.

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The Worm in the Apple by Stephen Cook Man, the utterances of his defamers to the contrary, actually has a lot of things going for him right now: highly advanced technology, unprecedented levels of scientific know-how, computers, global communications, a sense of global community, fantastic productive capability and many more. Unfortunately, a sane money system isn't among them and this constitutes a rather horrendous omitted basic that considerably nullifies the beneficial potential of his achievements. It throws the whole drive towards the creation of a truly worthy civilization off the rails and, if we do not act with some sense of urgency to correct matters, will propel it over the lip of the nearest ravine. The present system has been inflicted upon us for so long that its chaos has become the norm. It has consequently become difficult for people to believe that very much better than this can be expected of human affairs. Given our history to date, any attempt to demonstrate the attainability of a stable and well run economy can, by comparison with the woeful condition of the status quo, appear Utopian. It is a telling indictment of the status quo and of Man's loss of confidence in his ability to do anything about it, when the contention that maybe we could make a better job of economics is regarded as a Utopian daydream. Yet, given our current very high level of technological know-how, the accumulated experience of many thousands of years of civilization and the sincere desire of many millions of people armed, at last, with a correct analysis of precisely why our economic life has been thrown so dreadfully out of kilter, it is neither Utopian nor unreasonable to expect to see a well managed and stably prosperous world. All that stands between us and such a world is the implementation of a decent monetary system and even here what is lacking is neither know-how nor historical experience; merely honesty and common sense - and, frankly, an intolerance on our part of poor political, social, economic and organizational performance. One does, after all, tend to wind up with what one is willing to put up with. Those with a vested interest in the continuation of our current money/banking system will not wish the victims of their fraud to see the opportunities opened up by the restoration of honesty and full democratic accountability to the simple process of money creation. Vested interests are doing very nicely, thank you, out of chaos and human misery and do not want things to change just because millions of us ordinary folk could be happier and more secure or that millions of Third World children might not have to endure the slow painful torture of death by starvation. There is, for those vested interests, the hideous prospect that when people realise that they do not have to put up with high unemployment, powerless and inept

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The Worm in the Apple by Stephen Cook government, sham democracy, declining services, a crumbling standard of living, endemic debt, monetary conquest and enslavement and all the other ills that result from a corrupt and inherently unworkable money system, they are certain to refuse to tolerate it a moment longer. Moreover, when the many honest people in government realise that the economic tools for sound, indeed creative, administration are simply lying there just waiting for someone to pick them up and use them, they are unlikely to wish to remain the unwitting proxies of banking interests. In the end, of course, whether you will demand improvement or accept the continuing blight upon your hopes and your children's hopes is your choice. But in order to choose, you must first be able to see the alternatives. You have a right to know that a way out of our economic mess exists. That way out is neither complex nor difficult, given the will to avail ourselves of it. For once, this alternative is not something that can be foisted upon man either by trickery or force. To work, it requires your understanding, your support and your participation. It is this that I am going to attempt to show you in this chapter, by taking a brief look at how a proper money system can be expected to work in the service of all honest men rather than a small, corrupt clique of global loan sharks.

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The Worm in the Apple by Stephen Cook THE BASIC REFORM

Currently, as you now know, virtually all of the money in the economy is supplied by the banking sector as interest-bearing debt. Banks create money out of thin air, lend it to private, commercial, mortgage or government borrowers and then demand that it be paid back at interest. From this hidden corruption of the purpose and function of money spring the many economic ills of which we are all so well aware. When this basic hoax is understood, we discover that chaos is not some natural condition of human affairs and neither does it derive from some flaw in human genes, the will of fickle gods or the futility of existence: it has a cause that is entirely rectifiable. When you remove the cause of chaos in a particular area of human endeavor, the chaos evaporates. And so it is with the chaos that currently exists in the economic sphere. Correction of this flaw is very simple and well within our capabilities: the privilege of money creation must, as a matter of urgency, be removed from the banking sector and restored to government. Government, and government alone, must satisfy all the economy's needs for money by creating it and then spending it into the economy, never lending it. This is a very uncomplicated change but one with far-reaching benefits to everyone. Even the banking sector will benefit in that it will become more honest.

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The Worm in the Apple by Stephen Cook MONEY IS MAN-MADE

We have become so used to continual money shortage, ever-rising debt, unemployment, business failure, declining services, recession and all the rest, that we think of such things in much the same way we think of natural disasters such as hurricanes and earthquakes. We believe we have economic troubles because there is "not enough money to go around," as if money were a somewhat scarce natural resource. But money is not a natural resource. Human beings create it and determine the level of its supply and of all the things Man creates it is just about the easiest there is. The fact is someone has to create money and get it into circulation and then increase the money stock as the economy expands. That currently banks create new money out of nothing and lend it to us, whereupon we spend it into circulation and pay a toll for the privilege, does not mean either that it is a very clever system or that it enjoys the status of holy writ that we should never dare contemplate changing. In fact, when one looks for an adjective to describe the current system, the word criminal comes to mind. An endemic shortage of money accompanied by a massive surfeit of debt is a man-made problem created by men, specifically a coterie of international banking families and their allies, who are carefully never exposed by a compliant media and whose objective is to perpetuate the biggest con in history. Government can just as easily - indeed far more easily - create new money and add it to the money stock by spending it directly into circulation debt-free. Money created and put into circulation in this way obliges no-one to carry a debt so that it can exist and no spiral of worsening money shortage and increasing debt is created. This is uncomplicated common sense. It beggars belief that this is not being done. We would all be spared a great deal of stress, anxiety, debt, instability, uncertainty, bankruptcy, hardship and for many of our fellow human beings even hunger and war if it were. And nobody can give a single good reason why we should not do it.

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The Worm in the Apple by Stephen Cook STRONG GOVERNMENT

Government's failure to correct matters and its willingness to continue to "administer" a dishonest system with a built-in design fault, renders it an accessory to the crime. This is certainly a situation where ignorance, where it exists, is no excuse. Our leaders and officials are duty bound, if their intent is really to serve their communities to the best of their ability, to study, understand and implement monetary truths and where they fail to do so they rightly deserve our outrage. Given the opportunities reform presents to government, any determination to hang onto the present system is hard to comprehend. Government stands to benefit from monetary reform as greatly as the population it serves: it will have, for the first time in modern political history, an economic system based on sound, honest money to work with and administer and it will find itself at a responsive rather than recalcitrant and contrary helm; the pitfalls, hidden traps, confusions, complexities and dysfunctional mechanics of the current system will be gone. And so too, consequently, will government's perpetual embarrassment at its own apparent ineptitude. Perhaps no-one has ever concisely defined government's job or stated what the product of its endeavors is, against which success or failure can be measured. If we can define it in a nutshell as the creation of a safe environment in which all honest human beings can flourish and prosper, then monetary reform will provide government with the tools to do its job far better - if to date it has been able to do its job at all! Government will be able to ensure stability and just rewards for its population. It will, if it uses the reformed system wisely, be able to slash taxes, eliminate debt and extricate itself from the perpetual "money shortage" that so sabotages the efforts of modern administrations. It will find itself with the means to support industry where needed, to embark upon a rebuilding of infrastructure, to steadily eliminate poverty, slash unemployment. To deliver on its promises and bring about stability, sustainable growth and a revival of the nation's stricken fortunes will become possible in deed as well as word and government will receive the enthusiastic support, rather than the disillusion and resentment, of its people. And that is strong government! Such a bold, sweeping statement sounds like every politician's unattainable dream, particularly when compared with the dreadful mess in which he is presently obliged to operate. But this is every voter's dream too.

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The Worm in the Apple by Stephen Cook GOALS

Once we restore money's proper function of facilitating the distribution among people of the abundance our advanced civilization is able to produce, the shape of the world will depend very largely on what people want it to be like. This is in stark contrast to the current scene where the vast majority of human beings do not live in the kind of world they want and, making the best of the world they've got, have probably given up hope of ever being able to do so. How government will work with honest money will depend upon how astute are its planners and leaders. What its priorities will be when it finds itself in command of a more responsive economic helm will depend on the mandate it receives from its electorate. It is not for me to say what people will or should want, what their priorities will or should be, and thus what mandate will be given to post-reform governments; neither can we accurately predict how far we can further extend our know-how and technical expertise in pursuit of our goals. However, what we can predict is that Man will be able to pursue his goals on a far more level economic playing field and within a far more stable and benign fiscal environment than is currently permitted to exist.

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The Worm in the Apple by Stephen Cook IMAGINE...

What would happen if people, businesses and government did not have to carry vast amounts of debt in order for the money supply to exist? What would happen if we removed shortage of money as an impediment to economic activity? What would then be the limit to what we can create and have, in other words to our wealth? We can fully appreciate this when we consider just how corrosive is the ever increasing cost of debt servicing. Money committed to servicing debt, whether through the installments we are committed to pay on our loans and mortgages or interest on our credit cards and overdrafts is money which we cannot use as a medium of exchange with which to purchase goods and services and which instead is siphoned off as a steady stream of profit to the lending institutions. Businesses have loans, overdrafts and mortgages they must service and the cost of that debt servicing is passed onto us through their prices and so debt pushes up the price of almost everything we buy. Government pays billions annually in interest on the national debt and that cost raises our taxes or eats into the money government can spend on service provision. Local councils too are in debt and the cost of servicing that debt is passed onto us through our council taxes. Virtually every bill we pay, be it water, electricity, gas, telephone and so on is similarly inflated by a debt component. Moreover, the local council, central government, water, electricity, gas and telephone companies et al and every business that sells us goods or provides a service themselves buy goods and services in the process of manufacture or production goods and services whose prices are inflated by debt - and that cumulative added cost is passed onto us as consumers. Worse, this is a deteriorating situation in that the debt burden distributed through the economy is increasing, rendering debt servicing an ever larger component of cost. If debt servicing increases as a proportion of total income, the remainder of that income which can be spent on goods and services - actual spending power becomes proportionally smaller. What we experience across the economy as a result is a worsening scarcity of spending power. Imagine a factory that makes clay pots. It is able and willing to produce enough clay pots for everyone in the nation to own a clay pot and not just any old clay pot but a well-made, unbreakable clay pot. Everyone in the country wants to own a high quality clay pot but the country is a bit short of circulating money and only half the population can lay their hands on enough money with which to buy one.

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The Worm in the Apple by Stephen Cook The factory is therefore only able to sell half the clay pots it is able to produce - from its point of view there is only a demand for half the number of clay pots it can make. However, everyone wants one so it is not demand that is wanting but the consumer's ability to express his demand in the way demand is expressed, through bidding money for the product. Alternatively, the factory can produce inferior quality clay pots more cheaply so that more people can afford to have one - and lo and behold there is a "demand" for low quality clay pots. The impediment to the factory being able to distribute quality clay pots so that everyone can have one is not lack of willingness, inability to make clay pots, lack of clay, lack of people to man the factory or lack of desire on behalf of the consumer. It is merely lack of money with which the consumer can bid for the product. Yet, given the ability, resources and willingness to produce clay pots and the consumer's desire for them, it makes no sense at all that everyone cannot have one! There is a breakdown, then, in the distribution among people of expertise, resources, materials and products and it is money which is supposed to facilitate, not hinder, that distribution. The obvious solution is to increase the quantity of money in circulation so that consumers can lay hands on enough of those tokens of exchange we call money to be able to express their demand for a high quality clay pot. The factory would then become able to sell the clay pots it is able to produce, to all the people who want clay pots. Unfortunately, the current system of money creation does not quite work like that. As we have seen, the shortfall of spending power on the part of the consumer derives from the practice of creating money as interest-bearing debt. In such a debt-money system, as soon as one tries to increase the stock of circulating money through the process of lending it into circulation at interest, one actually increases the shortfall in consumer spending power! The trick then is to correct this flaw in the process of money creation, to create and issue money without a debt behind it so that as the money stock increases, consumer spending power increases. The limit to our wealth would then become what we have the physical and human resources, know-how and desire to do. That is a far higher limit than the one currently being set artificially low by an engineered shortage of money. And it is the only limit that should exist. If our goal is a stable, smooth-running economy that rewards honest endeavor so as to maximize human, material and technical resources in the service of real human need, then supplying that economy with its means of exchange through the mechanics of lending is manifestly inadequate to the task. In fact it is a recipe for the very disasters and decline we see all around us.

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Supplying the economy with money debt-free, however, is another matter entirely.

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The Worm in the Apple by Stephen Cook GOVERNMENT SUPPLY OF MONEY

Let us, then, imagine a government elected to power on a popular platform of monetary reform. Our new government would implement the basic reform: the removal from private lending institutions of the right to create new money and to charge, for their own immense profit, everyone else for the use of it; it would restore to elected government the exclusive responsibility of creating and spending into circulation all new money required by the economy. Ironically, by establishing a system whereby government creates money and spends it into circulation one is doing what most people assumed was happening already! This incorrect assumption is probably why the behavior of the economy never quite seems to make sense, why it appears erratic, confounds our efforts to predict and the sums never quite seem to add up. Yet the fact of the matter is that government currently creates and spends into circulation - in the form of notes and coins - only around 3% of our total money stock. Unbeknownst to us a very different money system, entering very different factors and influences into the economic sphere, has been in use for some considerable time: banks currently create and lend into circulation the remaining 97% and for that 97% to remain in circulation businesses, home-owners and government must carry (at a usurious rate of interest) the debt that enables it to exist. Our reforming government, however, will merely increase the aforementioned 3% to 100% - some in the form of notes and coins and the rest in the form of electronic number money according to the economy's relative needs for either form - and make it illegal for banks to create any new money at all. This then is not a new idea, it involves merely doing more of what the government is already doing, creating money and spending it into circulation. The only change is that it will satisfy thereby all the economy's need for money, rather than restricting itself to satisfying a tiny bit of that need and leaving the bulk of the job to the banks. In either system money is created and put to use. However, when money supply is conducted by the banking sector, the banking sector profits by levying a huge charge - called interest - for a service that requires relatively little endeavor: entering numbers into computers. Government on the other hand, seeking no personal gain, provides money as a service to the economic community. Government supply of money is immeasurably cheaper in other words, not only in a financial sense but, as we have seen with the debt-money system, in terms of removing the imbalances, stresses, poverty and decline inflicted needlessly upon the people. When one looks this over closely one sees that, administratively, this is a

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The Worm in the Apple by Stephen Cook simplification that involves relatively small amounts of adjustment and change. And it has been done before: by the American colonies with their Colonial Scrip, by Abraham Lincoln with his Greenbacks and by John F. Kennedy. The biggest adjustment required is to our assumptions and thinking and the biggest change will involve embracing new high levels of productive possibilities for the economy as a whole.

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The Worm in the Apple by Stephen Cook BANKS WILL STILL BANK

None of this means that banks will be completely forbidden ever to lend money. It simply means they will not be able to create new money in order to lend it but will only be able to lend money that already exists: that is, real money sitting as deposits in their customers' accounts or their reserves. In effect, one is removing from banking a function - money creation - that does not belong to it and restoring that function to the organization - government - to which it does rightfully and logically belong. The functions that do rightfully belong to banking - safeguarding, managing and investing their customers' money - will remain with banking. The banking sector will, of course, no longer be in a position of mastery over government and the economy but this again is a function that does not belong with the banking sector, which like any other industry or sector has no right to a privileged place in the governance of any nation, but belongs with government and, once we achieve the status of real democracy, ultimately with the electorate. Banking meanwhile will become what it should rightfully be: an industry providing a service for which it charges a fee and which profits or fails to profit on its performance in providing that service. That service, of looking after other people's money, might come not to involve money lending as its dominant function because any economy adequately supplied with debt-free money by government will not suffer anything like the current pressure placed upon industry, consumer and government to borrow. The removal of a flagrant and destructive dishonesty from banking practice - the lending at interest of money that did not previously exist to people who largely only need to borrow because the lending at interest of previously non-existent money is the means of money supply - would restore banking to the status of honest business. As such it would be due all the rights and freedoms to which any honest producer of a labor, product or service is due and in a thriving democracy such rights and freedoms will be broad and many.

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The Worm in the Apple by Stephen Cook THE PEOPLE DECIDE WHAT'S FAIR

The first task of our new, reforming government will be to remove as quickly as possible from the shoulders of people the twin burdens of high taxation and high levels of debt. The aim to which that task is directed is to enable people - all people - to get busy and flourish and prosper as quickly and with as little needless encumbrance as possible. Punitive levels of tax and crushing levels of debt are, simply, oppressive evils that people bear as a direct result of a debt-money system and are neither "natural" nor unavoidable. That we have been forced to endure them for a very long time is no reason people should be made to endure them a moment longer than necessary. So as to alleviate the debt burden, restore monetary justice and end the unjust profit and privilege of monetary fraud, government can call a moratorium on all existing debts that are based upon the lending of money created by lending institutions out of thin air. This would not include the lending of money previously existing as valid deposits and the government will act to fully safeguard and guarantee the current, deposit and savings accounts of all individuals and businesses as well as honoring its debts to pension funds. A fully open public debate will be held in which the matter of the honesty and ethics of lending non-existent money and the justice of the indebtedness resulting there from will be examined. The people will be asked to consider whether the wealth and power amassed by banks through lending money that does not exist constitute ill-gotten gains and whether, morally, people should be asked to continue repaying such loans. Utilizing all the channels of communication made available to us by modern technology, by dropping all overt or covert censorship of ideas and opinions so that all shades of opinion have free expression and by refusing itself to utter knowing falsehoods or issue misleading statements, it is entirely feasible for government to make such debate possible. Through a referendum, the public will then finally decide which and how much of these debts, if any, should be declared null and void and which, if any, should be honoured. Government will be bound to honour the public's decision. If the public vote for such debts to be honoured then repayment of them will resume. If the public decide such debts are invalid, then they will be cancelled. It is our contention that cancellation of much of the nation's debts would have a considerable positive economic impact on the lives of ordinary people, of industry and of the government that serves people and industry.

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The Worm in the Apple by Stephen Cook For example, the vast majority of mortgage holders would assume outright ownership of their properties with no further mortgage payments to make while government, saved many billions a year in payment of interest on its debts, will be able to use that saved money to reduce the tax burden, improve services or some combination of the two. With removal from banks of the right to lend money into circulation the debts would not be built back up again and a far lower level, perhaps even a negligible level, of indebtedness would become the norm. It is not hard to imagine the lifting of stress and anxiety from the shoulders of millions of citizens that would result from the declaration of such debt as legally null and void: it would have the effect of converting the circulating money stock into debt-free money, money that can now be used exclusively to perform its proper function: the exchange among people of goods and services. This appears to go against our instincts: it is natural and honorable to wish to honour one's debts. But that assumes the lender lent us money that he had in some way earned or legitimately acquired, that the debts in other words are debts in the sense that we understand debt. This is not so in the bizarrely unique case of bank lending where the money lent was created out of nothing simply by writing, so to speak, numbers in a ledger. Cancellation of such debt would end a massive injustice to millions of borrowers who must in effect labor to create real wealth and deliver it into ownership of the banking sector whose only "contribution" in exchange is to create debt for others to carry. Such lenders would not be disadvantaged by a refusal to pay them money they did not in fact have to begin with. Others have differing views as to how monetary reform should be carried out or the speed at which a transition from a debt-money system to a true money system should be brought about. The above is a moral as well as pragmatic stance. To continue to leave repayment of such dishonestly engineered debts in place would be, in effect, to leave the banking sector, particularly the faceless men who have ultimate ownership of it, with a continual stream of ill-gotten gains, a growing reservoir of unearned wealth and considerable financial power with which to affect the course of economic events. Put simply, it just ain't right and the sooner we as a community cease to tolerate what just ain't right, the sooner we can move our civilization up to as new plateau of honesty and true, equitable, justice for all. There might, while we are about it, be other areas of possible injustice the population would wish to consider: namely the legitimacy of the massive ownership of land, farms, industries and other assets acquired by the interwoven banking and multinational corporate interests on the strength of a fraudulent and unfair control of the money supply. For example banks, to suit their own purposes, have been able to crash companies,

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The Worm in the Apple by Stephen Cook farms, industries or even entire economies simply by manipulating the money supply, often thereafter buying up their assets for pennies on the pound; the massive power of the multi-nationals, which dwarfs many elected governments and holds many more to ransom, has arisen upon its alliance with the banking sector and its resultant easy access to the financial power of bank credit; the whole process of globalization and world governance, upon which its victims - the people - were never consulted, has been entirely engineered by those same banking/corporate interests. The central principle is that it is both perfectly reasonable and absolutely essential if we are to achieve a fully open, just and democratic society to have all this debated openly and those affected by it - the people themselves - to decide what is fair and what is not. Reform must be a fully democratic, communal undertaking, all views should have the right to full expression and the final decision, whatever our own views on the matter, must belong to the electorate. If this spirit of openness, full democracy and participation in a communal endeavor is carried forward, any decision can be later amended by a similar process if some more optimum course of action becomes obvious.

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The Worm in the Apple by Stephen Cook A LOT MORE SPENDING POWER

The release of spending power occasioned by the freeing of large chunks of people's incomes, government tax revenue and business earnings from a commitment to servicing debt would be considerable. Business, relieved from the debt that is a large component of its costs, would find true solvency far easier to achieve. At the same time the main source of the upward pressure on prices - the ever increasing cost of debt servicing - would be alleviated. Government, no longer obliged to pay billions of tax payers' money per year in interest on the national debt, will have that money to spend on providing service to the tax payer instead. And the consumer would find the portion of his income that had hitherto been siphoned off into the coffers of the money lenders is now his to spend as he wishes on real goods and services, both improving the quality of his life and stimulating commerce.

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The Worm in the Apple by Stephen Cook THE SPECTER OF INFLATION

It is claimed that empowering government to simply "print" and spend new money into the economy will be inflationary. This is the main argument that the beneficiaries of the current system put forward to discourage the notion of government performing the job of money creation. It is simply not true and if we buy it we are buying a thin excuse for leaving the private banking corporations with the highly profitable privilege of debt-money creation. The mere fact of restoring to government the duty of money creation will not of itself cause inflation. There will not be inflation if the rate of increase of money supply keeps pace with the rate of increase of economic activity. If new money is spent in the direction of factually stimulating and nurturing increased production, and is not spent into the economy in excess of the increase in production, there will be no inflation. This presents government with almost limitless scope for judicious spending. Government is quite capable of monitoring prices, incomes and the spending power of the currency and if inflation occurs, it is quite capable of noticing it long before it reaches even a few percentage points. So are the media, government watchdogs, opposition parties, consumer groups, trades unions, employers' associations and in fact just about everybody. Rising prices, declining monetary value and so on will provide clear evidence that government has, for whatever reason, gotten its sums wrong. Government will be obliged to correct an inflationary situation and can easily do so by holding off on money creation until the situation stabilizes or by withdrawing money from circulation, for example by levying a temporary tax and expunging the money so collected. That way, if it is needed, a more gradual increase in consumer spending power could be achieved, creating a rise in consumer demand for goods and services with which industry can keep pace as it expands production to satisfy it. We think the need for such a tax unlikely, except perhaps as an emergency measure to correct an extreme over-supply of money by government. The formula for dealing with any manifest inflation becomes quite simple: increase production and reduce government spending. Moreover, Parliament can, if the electorate so empowers it, enact laws rendering incumbent government indictable for permitting inflation to run uncorrected above certain (low) levels. The calculation of how much new money government is authorized to create and spend (but not how it is spent) could become the job of a new monetary agency legally constituted to be immune from party politics or political influence, yet still working under the spotlight of public scrutiny.

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The Worm in the Apple by Stephen Cook Such options would be the subject of democratic choice and one envisages a scenario in which different parties each put forward their own programs for reform with their own proposed safeguards and fail-safes and the public chooses between them. Once money itself is straightened out, inflation becomes no longer the hideous specter it has been until now. It can be understood, its indicators read and correctly interpreted and it can be handled very easily. More importantly, an astute and responsible government will be able to avoid it entirely.

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The Worm in the Apple by Stephen Cook A GOVERNMENT WATCHDOG

Another safeguard can be provided by setting up a government watchdog to scrutinize the actions of the various agencies concerned with government creation of new money and its general handling of the economy in the new era. Such a watchdog would have no executive, legislative or judicial powers but its function would be to advise government and its agencies, as well as the public, and to report directly to the public on the government's financial conduct, issuing warnings where such conduct is found to be undesirable or potentially harmful to the nation. Such a body would be controlled by private citizens, its managing committee perhaps drawn from the leading groups and individuals in the monetary reform field and employers', employees' and consumers' representatives. Its constitution would stipulate the same degree of impartiality expected of the judiciary and the only vested interest its members would be permitted to have would be the vested interest of any private citizen in a stable economy marked by smooth exchange between producer and consumer. Government would have no powers to interfere with the body's appointment of members, deny it access to information or in any way interfere with the publication of its observations. Government would be obliged however, by law, to provide sufficient funding for the Watchdog to operate. We will have thereby an organization exterior to and separate from government, able to keep government, the media and the general public accurately informed as to the government's handling of the economy.

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The Worm in the Apple by Stephen Cook PROTECTING THE CITIZEN FROM HARM

Government should act to protect anyone unfairly disadvantaged by this change in our affairs, whether on the matter of property ownership or some other concern, establishing a judicial body that will review each case on its merits and then compensate for unjust loss, where applicable. Such protection would include the legitimate functions and viability of banking and the welfare of employees of the finance industry. Access to such justice should be free to any citizen and government should err on the side of generosity. The whole purpose of reform is to establish a more workable system that is to the advantage of all honest people and effective measures must be taken to protect from loss or harm or victimization those who act and have acted in good faith. There is no room in this reform for the punishment of anyone - not even the bankers, whom we only wish to admit to the ranks of honest men.

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The Worm in the Apple by Stephen Cook RE-BUILDING THE NATION'S PRODUCTIVE BASE

It is conceivable that, as the nation's productive base has been decimated to a degree far more catastrophic than the public have been told by decades of monetary mis-management, a considerable rise in consumer spending power occasioned by cancellation of unjust debt could result in a rise in demand for imported goods. This would of course upset the nation's balance of trade, render it a net debtor with the international community and devalue the purchasing power of the national currency abroad. Once again it is well within government's capability to monitor the situation. If needed, it can levy a tariff on imports so as to keep the buying of foreign goods at a sensible level where any spending abroad is backed by the production of tradable goods at home. What is left of the home market can thereby be protected whilst existing industries are rebuilt and new industries created. The buying or selling of goods between nations using money as the medium of exchange nevertheless boils down to the exchange of goods or services for goods and services and any nation wishing to acquire goods and services produced by other nations must have industries capable of producing goods and services other nations will wish to buy. A nation, ultimately, is only as wealthy as it can itself produce products for its own consumption and/or exchange with other nations. For a nation, like any individual, to become wealthy by any other means involves conquest, theft, enslavement, fraud or some other criminality or parasitism. Reconstruction of the nation's productive base would be a high priority for any new reformist government but, with monetary reform and control of a debt-free money supply, the means to catalyze such a transformation will be at government's disposal. Home industries, freed from the excessive burden of debt, will at the same time be at a considerable advantage in both the home and international market place, in terms of production costs and prices, over competitors based in nations still laboring under the weight of a debt economy.

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The Worm in the Apple by Stephen Cook HARMONY

Industry distributes consumer spending power through wages, salaries, fees, commissions and so on. If industry wishes to produce and sell more and make healthy profits it must sell its products at prices that enable it to do so. To secure those prices from the consumer it must provide the consumer, through the paying of wages and salaries, with sufficient spending power to enable the consumer to meet them. Industry as a whole, if it is to prosper, has a vested interest in ensuring the payment of wages sufficient for the consumer to likewise prosper. Industry and its employees have always had this common interest but it has been obscured by the presence of industry's and the consumer's debt burden, which removes spending power from circulation, forcing industry to try to keep its wages bill below the level that would enable the consumer to pay the prices it needs to secure. At the same time the consumer has been forced to seek wages in excess of what industry is able to pay. The effect has been to disrupt the smooth distribution of spending power upon which economic life depends and place employer and employee into a state of competition with one another, where there should be harmony, partnership and common interest. It is this factor that lies at the root of much of the industrial strife, poverty amidst plenty and social injustice of the last few centuries. Removing from industry and consumer the unnecessary burden of borrowing into existence, at interest, their own means of exchange will assist the establishment of that state of harmonious common interest.

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The Worm in the Apple by Stephen Cook LOWER COSTS, INCREASED PROFITABILITY

It is not hard to imagine the opportunities for business to flourish in an economy with low taxation and negligible levels of debt. Most producers endure two unnecessary costs: excessive taxation and the excessive repayment of debt. Those costs have to be covered by adding them into the prices charged the consumer. Once they are removed, there will be scope for a considerable reduction in prices relative to the consumer's available spending power. Provided enough money is put in circulation to satisfy the needs of commerce, enabling it to charge for its products prices that accommodate all its costs and a healthy level of profit, industry will be greatly more able to operate with a profit and re-invest from profits. The need to borrow to invest or to run on bank loans and overdrafts will very largely disappear. Running into long-term debt will become a true indicator of poor business management rather than a virtually unavoidable normal business practice.

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The Worm in the Apple by Stephen Cook MORE MONEY NEEDED

Unburdening both consumer and producer of hindrances to production and smooth exchange will enable greater levels of demand to be expressed by the consumer and met by the producer. An increase in economic activity will result. The increased amount and variety and quality of goods and services of all kinds being exchanged among people will require new money to be created by government and spent debt-free into circulation so as to keep pace with economic expansion. Thus money will work as a facilitator of economic activity and not as a facilitator of economic plunder by the banking sector. Government will be able to fulfill a role that aligns with its true function, yet presently always eludes it: to stimulate and support, rather than stifle and hinder, the economy. Monetary reform presents government with what Abraham Lincoln called its "greatest creative opportunity". In essence, the demand for new money occasioned by economic growth provides government with a second source of revenue quite in addition to what it raises through taxation. This is debt- and tax-free revenue. On what government will spend that new money will depend on its mandate and its stated priorities. The amount of new money the government has at its disposal will depend upon its adroitness in facilitating an increase in the quantity and quality of goods and services in the market place. The better a government does, the more it and the population - will be rewarded by having more money to spend.

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The Worm in the Apple by Stephen Cook INCREASED TAX REVENUES/LOWER TAXES

Production will increase as industry seeks to meet the consumer's improving ability to express demand. Increased production will increase the distribution through wages, salaries, fees, commissions and so on of consumer spending power. This in turn will facilitate the expression of more demand, stimulating more production, employment and distribution of wages. Increased production, employment, sales and profits will result in an increase in government tax revenues. This will enable a prudent government to bring down the tax rate whilst increasing total tax revenues: and this is the prize for any government able to sensibly balance these two factors. Where local or central government borrows to finance the building of some public amenity, which it does frequently and in increasing amount in the current system, the effect of interest payments on such borrowing over a number of years is to greatly inflate the overall cost of it. For example a new shopping mall financed with ÂŁ20 million of borrowed money that is paid back at 5% interest over 20 years will cost in total ÂŁ40 million and that doubled cost is borne by the tax payer. After reform, government will no long need to borrow money to finance projects and will instead find the money from existing revenues or the revenue provided by the demand for new money. The result will be a considerable reduction to the tax payer of the cost of financing government services, providing government with a further opportunity to increase service provision and reduce taxes. Local and central government is a consumer of equipment, fuel, stationery, raw materials, contractors' services and so on and in the present economy the debt component places an upward pressure on the price of its purchases. This in turn places a pressure upon government either to "economize" by reducing services or to raise local and central taxes to cover increasing costs or, of course, a combination of the two. The tax payer therefore tends to find he is paying more and more tax for less and less service both at central and local government level. After monetary reform, the continual inflation of costs for both government and its suppliers that is occasioned by debt servicing will have been removed. The aggregate effect of reduced costs, removal of government's obligation to repay annual interest on its borrowing and increased revenues resulting from increased production present considerable scope for reducing the people's tax burden whilst at the same time making significant improvements in service provision. It has been estimated that government may be able to reduce taxation by as much as 12c in the dollar without any loss of services - in fact whilst improving services. We suspect that in the long term the reduction of the tax burden may be considerably more than that. This will be particularly so if government's emphasis is

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The Worm in the Apple by Stephen Cook upon reducing taxation; in our view this is the correct emphasis because the tax burden alone operates as a suppressor both of consumer spending power and industry's viability and it effectively penalizes production. Alleviating the tax burden will establish a new right for producers: the right to keep that which has been honestly earned. There may be other areas where government can increase the efficiency, fairness and viability of tax collection, and further bolster that new right: for instance, by the abolition of income and other taxes and the instituting of a single purchase tax through which all government tax revenue can be collected. The existing complex system of overt and covert taxation acts to hide from the tax payer the full extent to which he is denied the right to keep and direct the expenditure of what he has earned and a single purchase tax will make the extent to which he is taxed very clear, as it should be. However, such reform, being tax reform, is beyond the scope of a purely monetary reform campaign. Current punitive levels of taxation, occasioned by government debt and escalating debt-derived costs, will become a thing of the past. The process of more and more tax for less and less service will be reversed. The point will be reached where the citizen as consumer or producer no longer experiences taxation as a burden or imposition but instead as a fair and affordable payment for valuable services rendered.

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The Worm in the Apple by Stephen Cook VANISHING DEBT

Oppressive levels of individual, business and government debt likewise penalize our efforts to become more productive. Arising from the fact that money is supplied to the economy as debt, interest payments on such borrowing amount to a toll or tax we must pay for using our own means of exchange. Each time we use such money - that is, electronic, check or credit card money, we pay a fee for the privilege and so it costs us money to use our money! The only money that does not cost us money when we use it is notes and coins because this is supplied free of such tolls by the government. After reform, all money will operate as government-supplied notes and coins do at present, in that it will carry no debt burden and we will be charged no toll for the privilege of using it. It is unlikely that all borrowing will cease, particularly for larger consumer items, but the level and frequency of borrowing will drastically decline. Any rise in the general level and cost of borrowing, either by the consumer or industry, would be taken as an indicator of a possible under-supply of money which the government would be expected to scrutinize and, if proven necessary, correct. The practice of so-called Fractional Reserve Lending will have ceased or been phased out and what borrowing remains in a post-reform economy will be of already existing money. It should in fact become possible for people to save over a manageable number of years, the money required to buy their own homes.

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The Worm in the Apple by Stephen Cook MORTGAGES

When we examine the current high cost of housing we discover that around 60% of the entire money stock is created by mortgage borrowing. Property prices are inflated by the injection of massive amounts of borrowed money into the property market. By pushing up prices, the lenders necessitate even higher levels of borrowing, all of which is to their immense profit but enslaves everyone else to a lifetime of paying off the interest. A ÂŁ70,000 home ultimately costs the home-owner around ÂŁ200,000 and both sums are ridiculous when one examines what it actually cost in labor and materials to build that home - as is the fact that in order to acquire one home a mortgage borrower often has to shell out the money for two or even three homes! All of this means that property prices can be expected to drop to far lower levels that actually reflect the cost to the builder - himself saddled with fewer debt, tax and other costs - of building the property and making a reasonable profit when he sells it and real supply, demand and competition within the property market. In case anyone is alarmed by the prospect of the house for which he paid ÂŁ70,000 dropping in price to some fraction of that amount, he should reflect that if his mortgage has been cancelled he will now own the house outright and all the money he makes when he sells it will be his and any subsequent property he buys will also be commensurately lower in price. If we remove the debt component that pushes up a property price into the stratosphere and take into account the real cost of building it and a reasonable profit when selling it and factor in increased consumer spending power, the ending of the money scarcity that obliges people to borrow rather than to save, and freedom from taxation, real home ownership becomes an attainable reality. Indeed, if there is a situation in which the consumer is unable to save over a realistic number of years, or borrow without taking on a life-time of high-interest debt, the money needed to acquire a home, government should review the money supply to see if an increase is needed.

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The Worm in the Apple by Stephen Cook GROWTH

Currently, economic growth is debt-driven. Companies seek to expand sales to capture the consumer's perpetually scarce spending power and stay ahead of their expanding debts. They centralize, "rationalize", shed labor and mechanize, bulk market and bulk produce as cheaply as possible as they are caught between the conflicting pressures of consumer spending power inadequate to meet the prices they need to charge and the inexorable rise of their debt-derived costs. As a result industry finds itself embroiled in commercial warfare in which it is driven to compete ever more frantically in a ferocious market and to sell, re-sell and sell again to consumers who are persuaded by a relentless storm of marketing psychology, tricks and gimmicks to want what industry is able - within existing strictures - to produce. This is a theater of operations which, like any war, leaves little room for planning for the needs of future generations, ethics, compassion or human sensibilities. Such things are not, of course, lost to Man but his decent motivations are contradicted by the "market forces" of a system that was never designed either to serve them or permit their expression. Real human need extends wider and deeper than the ownership of mobile phones or the consuming of brightly packaged beef burgers. A system that cannot meet the full spectrum of human need and for which the spectrum of needs it can meet perpetually narrows is not only pointless it is a liability. In the current climate, concern for the real needs of people as whole human beings, of the need for community, a stake in the nation's future, for meaningful work, the overall quality of living, a judicious regard for the needs of future generations and the ability of the environment to sustain life increasingly become luxuries "no-one can afford." The reckless genetic tampering with the food chain, destruction of the rain forests, the continual downgrading of services such as Health, Education or the railways, the plunder of the Third World or the destruction of whole communities or whole sectors by the closure of productive industries are among a vast number of cases in point. Reform will, as the money supply is increased debt-free, enable an ever wider band of diverse human need to be expressed and, provided the physical means exist, to be met. Producers will still compete to provide the best service, prices, product and so on but they will be able to compete within a framework of adequate rather than scarce consumer spending power. They will also compete on a more level playing field because in a debt economy an unfair advantage in the market place is secured by he who has unlimited access to bank lending.

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Indeed, the manipulative influence of the money lenders who can decide who will receive loans and live or be denied loans and die, to control the fortunes of industries and businesses by their lending policies or even manipulate the money supply in order to acquire control of the nation's assets, will be neutralized. Removal of the debt basis of the money supply will, without eliminating competition or returning us all to a pre-industrial and entirely fictitious Utopia, remove these distortions, end commercial warfare and replace it with sane competition and render economic growth a matter of discovering and catering for real human need. Money is the means by which human beings express demand. When money is restored to that sole function, real human need will finally have a means of expression unalloyed by extraneous factors and the supplying of real human need will have a means by which it can be properly rewarded. Money will, as the venerable Abraham Lincoln pointed out, become the servant of humanity, not its master and growth will be driven by the supplying of need rather than the servicing of debt.

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The Worm in the Apple by Stephen Cook QUALITY DRIVEN GROWTH

Our use of the term economic growth in the context of a post-reform epoch should not therefore be confused with the debt-driven growth and mass junk production of the current era. Monetary reform will provide the consumer with increased spending power, and spending power that will rise to match the increase of goods and services on the market in terms of quantity, diversity and quality. The new economy will be far more able to respond to consumer need. If the consumer wants junk products, shoddy furniture, shoes that fall apart, cars that rust, kettles designed to break down and food of dangerously low nutritional value, then that is what the economy will provide. We suspect that given the choice this is not, by and large, what human beings want and, given the means to express it, their demand will be for something much better. The current prevalence of junk production derives from the widening gap between consumer spending power and industry's costs, which forces the consumer increasingly to buy cheap and the producer increasingly to produce cheap. An increase in consumer spending power and a narrowing to zero of the gap between it and industry's costs will provide the consumer with sufficient spending power to begin, if he wishes, to be able to express a demand for improved quality and durability. To produce a poorly made kettle using cheap materials and minimal labor costs so much. To produce a kettle of superior quality made with better materials, using more labor and taking all necessary measures to protect the environment during the production process obviously costs the producer more and that greater cost is reflected in the greater price he must charge the consumer. Similarly a rail network that transports people to their destination in comfort and safety cost more to build and run than one which skimps on comfort and safety. The producer will be able to obtain from the consumer the price he needs to charge for an improved quality of product if the consumer's spending power rises to match it and the consumer's spending power will match it if sufficient money is circulated. To improve the production of a product so as to safeguard the environment and make the product more durable and thus less wasteful of resources, even while the numbers of that product produced do not rise or even fall, is an increase in production because the effort to improve product quality and environmental safeguards involves an increase of labor, or in the activity of the machines that serve Man. Similarly any extra activity involved in improving a service, cleaning up or protecting the environment or entering more care or craftsmanship into the production process involves economic growth but growth in the direction of quality rather than quantity bereft of quality.

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The Worm in the Apple by Stephen Cook It is within the power of government to assist - if assistance is needed - this move in the direction of improved quality. If we take food production as an example, government can set the minimum standards acceptable for food quality and nutritional content and insist that all food at least meets them. It can then gradually raise those standards at a pace the food industry can accommodate until an agreed upon optimum standard for food is achieved. If such an upgrading of food standards results in a rise in the industry's costs and thus food prices, such a rise would not be evidence of inflation because it has resulted from an increase in production through a change for the better in the finished product. It is conceivable that an overall rise in costs may not result at all because at the same time a reduction of costs due to reduction of industry's debts and tax burden will be occurring. However, such an overall increase in production unmatched by an increase in consumer spending power would create an overall relative scarcity of money in the economy which would show up in a slowdown in sales, reduced profits and a downward pressure on wages and a fluctuation (increase) in the value of the currency, which government would detect and correct by increasing the money supply accordingly. Through this process, government could guide and assist a rise in general food quality, with a view to the eventual replacing of mass-produced, genetically altered, nutritionally bereft and chemically contaminated food by wholesome, tasty and nutritious food. A vast improvement in the condition of our farmland and our environment would result, alongside a general improvement in the population's physical and mental health: the reduction of many diet-related diseases, mental and emotional disorders, allergies, dental problems and deficiencies. This would enable millions to be saved from the national health bill, a saving that would enable government to cut taxes accordingly and thus create a further saving to industry and the consumer. In a similar way, government could gradually raise the minimum standards of environmental safeguards or foster the growth of new industries and sources of employment devoted to the prevention and cure of environmental damage. At the same time, new-money revenue can be directed as aid and subsidies towards assisting the revival of currently ailing or moribund industries. Our farming industry would probably be high on our list of priorities: it makes no sense for us to import food we can produce ourselves or be dependent for our food supply on foreign sources whilst our own farms lie in ruins. The decimation of our farming industry is a crime any government simply must correct as matters of human decency, national survival and common sense. Monetary reform and an end to commercial warfare remove both a major cause of environmental decline and the major impediment to efforts to reverse that decline. It provides us with the crucial economic tool whose omission has hampered our efforts to ensure our own global survival.

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The Worm in the Apple by Stephen Cook INTEREST RATES

Raising and lowering interest rates are currently used as a clumsy mechanism to control the supply of borrowed money to the economy. Where money is no longer loaned to the economy by private banks the use of interest rates to control its supply it will become redundant. And so too will end the inordinate power of the banking sector to control our economic fortunes. Interest rates will revert to what they should be: an incentive to savers and investors and a charge paid by borrowers for the temporary use of savers' and investors' money, with a mark-up that rewards the bank sensibly for managing such transactions. In the post-reform epoch, where borrowing will be in any case at far lower levels, interest rates will no longer have the overriding importance or impact that they have today and will be negotiated as a binding contract between borrower and lender, with the banks competing with one another in the market place to provide to saver and borrower the most attractive rate.

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The Worm in the Apple by Stephen Cook CALCULATING MONEY REQUIREMENTS

An accountable Monetary Agency will monitor prices, sales, profits, the purchasing power of the currency and overall economic activity. It will calculate therefrom the economy's need for money: the rectifying of any shortfall in money supply by creating new money and spending it into circulation or the rectifying of inflation by, if needed, withdrawing money from circulation. It will then authorize government to create new money or withdraw money from circulation. It will be able, as it becomes expert in monitoring the economy and extrapolating from trends, to reliably predict future growth and thus achieve a smooth rate of supply of new money that minimizes to barely perceptible levels any swing between money surplus and money shortage. If government can manage the economy so as to keep it continually expanding, it will thereby ensure that it continually has new money to spend. For example, if the economy were to expand by, say, five percent each year, requiring an increase each year of five percent over the previous year's money stock, then government will not only have a regular budget of new money to spend, but the amount of that additional spending power will increase annually. The electorate will come to expect zero inflation, no recessions, a stable value for money, low taxation rates, plus all the benefits of regular expenditure by government of new money on public works. Moreover, governments will be judged by their performance in this regard.

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The Worm in the Apple by Stephen Cook SOVEREIGNTY

He who controls the money supply of a nation, controls that nation. There can be no true sovereignty for any nation unless that nation's own government controls the nation's money. Modern governments are hopelessly in debt and dependent for their money supply upon the money lenders. If they step out of line, their creditors can start calling in their loans or refuse to grant new loans. When a nation's money supply depends almost entirely upon the granting of loans, the prospect of the economic depression such an attack would cause is too gruesome for any government to contemplate. Governments do what their creditors tell them to do. Money power sets an international banking plutocracy above elected national government. Yet this banking power and the apparent powerlessness of government rest entirely upon the smoke and mirrors involved in money creation and depend upon governments and their people remaining ignorant of the fact that it is smoke and mirrors. The whip hand of banking interests only remains possible while we continue to accept the status quo of money creation. In other words it is we who, knowingly or otherwise, provide banking with the gun it holds to our own heads. The moment people get the idea that they do not have to allow banks to create their money supply, do not have to borrow it into circulation and do not have to pay through the nose for its use and as soon as they realise that it is in numerous ways easier and immeasurably less expensive to have government create that money, the power of banking over governments will end. Thus monetary reform, in that it establishes elected government as the agency in control of our money, will restore to the nation true sovereignty that was lost long ago and we shall see in operation perhaps for the first time in our history true, factual democracy rather than the appearance of democracy veneered, so as to fool us, over a far different reality. Government that no longer depends on borrowing to maintain the money supply is no longer beholden to creditors who can dictate its policy. It becomes master of its own destiny, bound by the mandate on which it was elected and no longer influenced by unelected and faceless money lenders.

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The Worm in the Apple by Stephen Cook NATIONAL SOLVENCY

The nation will no longer trade from a position of insolvency and be forced to export in order to obtain foreign revenue. The nation will be able to produce goods to satisfy its own needs for those goods and export its surpluses and thus achieve a balance of trade. Government will no longer have to go cap-in-hand to giant multi-national corporations for investment but will be able to boost existing industry or foster the development of new industries by judiciously directing the expenditure of its own new money rather than relying on the "investment" of borrowed money. The more it can get the wheels of industry going, the more it can assist the creation of needed and wanted goods and services of all kinds, or itself provide needed and wanted services to the population, the more demand for an increase in the money stock it will create........and the more money it will have to spend. Instead of looking for ways to cut service provision, government will have a vested interest in increasing service provision.

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The Worm in the Apple by Stephen Cook EUROPEAN UNION

Whether the people want monetary and political union with Europe will be a matter for the people to decide. However, the reduction of taxation, near elimination of debt, renewal of infrastructure, full employment and national solvency of the post-reform world will render impotent the current bogus arguments in favour of union. Most certainly the nation will have no need of the central but carefully never mentioned agenda of monetary union: control through the mechanics of lending of all European peoples from a single central bank in Germany. Monetary Union, PR and disinformation to the contrary, cannot and will not deliver prosperity, stability or human freedom because it merely sets in concrete the very monetary folly that has so weakened and bankrupted European nations and delivers ultimate power to the very faction that has financed so many of Europe's wars. The nation, restored to the position of an economic powerhouse, will be beyond persuasion that it needs such a union because the very prosperity, stability and freedom that union purports to deliver will already have been achieved. Not only that, but the hidden influence behind almost all wars of the last few centuries, the international loan sharks, will have lost their power to provide money to both sides so as to facilitate mutual slaughter. Hitler for example would not have been able to build the war machine that menaced the world had not the money powers been there to lend him the money with which to do it. We cannot say that monetary reform will end all war but we can say it will be harder for homicidal lunatics to embark upon mechanized slaughter of their neighbors if they do not have access to the funds provided by loans that future generations will have to repay. If they want to go to war, they will have to persuade their own people to endure an immediate and massive hike in their taxes or inflation or both Moreover, rescued from the control of its own creditors, and itself in possession of a full understanding of how the money scam operated, a free press will no longer be obliged to dissemble or propagandize arguments so as to further the aims of hidden money powers. The proper, open and balanced debate the people so far have been denied will become possible.

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The Worm in the Apple by Stephen Cook PENSION FUNDS

Currently pension funds lend money to government by buying government bonds, which are glorified government IOUs that are after a period of time redeemed by government at interest. The bonds are bought with real funds amassed from the contributions of ordinary people and the government later redeems the bonds with money taken from people in taxes. After MR, government will honour all such bonds, redeeming them with new debtfree money until all such outstanding debts are repaid. As government will no longer be borrowing money, pension funds will then look for new areas and new ways in which to invest their billions and put their investors' money to work.

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The Worm in the Apple by Stephen Cook EMPLOYMENT

Production is the basis of human morale. To be able to give something in exchange for what he receives is the basis of man's integrity and to deny him the right to give as well as receive is, eventually, to render him criminal. One can conceive of no greater disservice to Man than to crush his morale by denying him the right to produce, or crush his self-respect by denying him the dignity of playing his part in the process of exchange. This does not imply that production must be enforced or arduous or that work cannot be personally interesting or rewarding or that leisure is undesirable. One only has to drive down any street and observe the somewhat neglected, knocked-about state of our environment, natural or otherwise, to know that there is much that needs to be done. Far from there not being enough work to go around, it is probably lack of human resources that will prevent everything getting done that needs to be done. Priorities will therefore have to be assigned and the huge backlog in the nationally selfsufficient production of goods and services, cleaning up and environmental repair, creation of amenities and so on tackled step by step in order of priority. There is no reason why anyone has to be out of work unless he chooses to be, once we remove the money-shortage impediment to production. We cannot expect government to handle everything all at once but we expect in a relatively short period of time, through the elimination of debt, reduction of taxation, expenditure of new debt- and tax-free money on amenities, services and support for industry that we have outlined above, a condition of full employment to be restored. We see no prospect of humanity ever running out of things to do, new goals to achieve, new discoveries to make, new realities to create or new worlds to conquer. Man will only ever run out of meaningful work when he runs out of dreams.

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The Worm in the Apple by Stephen Cook CRIME AND DRUGS

There are other factors and other agencies at work in the creation of our crimeand-drugs epidemic. Although they are intimately connected with the social control ambitions of the money powers, they are beyond the scope of a purely monetary reform work. The causes of crime and the related phenomenon of drug abuse are not exclusively economic but a dire economic situation provides a fertile ground in which crime and social decay can germinate. It is true to say that a man becomes criminal at the point where he loses his self respect. The infliction upon millions of inexorable debt and insolvency, the removal from many of much hope for meaningful employment, the stress placed upon families by money problems, the immersion of increasing numbers of people into money difficulties, the increasing bleakness of the human landscape, the decline of education which affects people's ability both to assimilate information and to reason, redundancy, failed enterprise, the modern near impossibility of being both rich and honest, anxiety and sheer desperation, all work to erode man's self respect, sense of hope and belief in his own abilities. In such a chaotic and degraded "civilization" it is hardly surprising that crime thrives. Monetary reform will bring about a money system that more fully rewards honest endeavor and which removes the twin suppressors of debt and taxation from people's efforts to prosper. It will end commercial warfare and restore full employment. It will enable the nation's downward economic and social spiral to be reversed. It will enable man to create a better social climate in which to live. Nobody can claim the post-reform world will be perfect. It will however be a considerable improvement on the status quo. And it will provide a climate in which we can set about reversing the trend of drug abuse and crime, with some hope of meaningful progress in restoring to many their lost self respect.

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The Worm in the Apple by Stephen Cook THE THIRD WORLD

One thing which distinguishes Man far more than the follies and cruelties upon which the press and psychiatrists are so determined to fixate his attention, is his compassion for his fellows. At this writing there is a considerable weight of public opinion that demands the international bankers cancel outstanding Third World debt and so alleviate the humanitarian catastrophe that has befallen the developing world. However, there is no proposal to cancel the mechanism of covert economic subjugation that caused this monstrous injustice to be foisted upon half of humanity. If the debt-money system remains in place globally, even if the banks are persuaded to "forgive" Third World debts, such nations will within a generation find themselves back where they started: up to their eyeballs in un-repayable debt and in a condition of virtual slavery. Third World nations are in debt financially to the developed world and this gives a completely false picture of the physical reality. Third World nations, driven to export in order to repay interest on their loans, have impoverished their own peoples, who enjoy little benefit from their own production. What those people produce has enriched the "creditor" nations in terms of real food, real resources and real manufactured goods and they have received only paper debts in exchange for that munificence. If we look at the exchange between the developed world and the Third World in terms of real goods, we discover that, in terms of real wealth, Third World nations have paid their debts many times over and are considerably in credit with the developed world. Monetary reform will restore ethics and justice to the international arena, and the covert plunder of Third World nations will cease. Third World nations - or indeed any nation - have an opportunity to act now and break this vicious cycle of debt and the global hegemony of the banks and multi national corporations that derives therefrom, that has brought starvation to so many people. Their solution is for their governments to stop borrowing money from the banks and start creating and spending into their economies their own national currencies debtfree and to supply in this way all their economies' needs for money. The solution is so simple it beggars belief. There is no good reason for a people not to benefit from what they themselves create and to trade their surpluses for what they do not themselves produce, no reason for them to go hungry, no reason for them to go without the infrastructure and amenities basic to civilized living. All they have to do is responsibly create their own money and then spend it in their home economy.

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The Worm in the Apple by Stephen Cook OPEN GOVERNMENT

For the successful operation of a system whereby government creates and spends into circulation all the economy's money needs, one thing is essential: open government and complete transparency. Whatever agency is given the task of calculating money requirements, its calculations must be fully and unequivocally open to full public scrutiny. Secrecy in how the figures are calculated and the amassing and evaluating of data upon which the calculations are based must become illegal and officials held accountable in the courts for violations of such law. And no official, no matter how high his office, must be above the law. Whatever agency has the job of monitoring the economy's prices, monetary stability, industrial profitability, sales levels and consumer standard of living so as to supply the data upon which money supply calculations are based must likewise conduct its job under the full glare of public scrutiny with no exceptions and no immunity to law. Such agencies would be answerable to the nation’s Parliament for errors in their calculations, as evinced by the presence of inflation, recession or instability in the value of money. Parliament in turn will be answerable for its conduct to the people. Similarly all matters concerning government spending policies must be fully transparent and open to public view. Whoever controls a nation's money supply has absolute mastery over that nation. By ensuring that the government which controls the money supply is democratic government we ensure absolute mastery over ourselves. Benign, honest and open government is not a luxury. It is in fact an indispensable prerequisite to the long-term survival of our civilization and its societies.

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The Worm in the Apple by Stephen Cook IF THE WORST HAPPENS

The current system cannot be sustained indefinitely because it is inherently flawed. If we extrapolate current trends of mounting debt and insolvency, debt driven growth, rising taxes, environmental destruction, global fiscal chaos, growing poverty, human misery and popular disaffection and so on into the future the conclusion is obvious: it just isn't going to "get better" because it can't and sooner or later something has to give. It would be wise for us to reform our money system before that happens but if the worst is, through our default, allowed to happen, government at least has a readymade solution for economic collapse: Immediately cancel the borrowing into existence of the money supply. Immediately assume the exclusive right to create and spend into circulation all the money needed by the economy. Collapse can be turned into boom very quickly and nobody need suffer. The solution is so simple only insane government will ignore it.

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The Worm in the Apple by Stephen Cook SPENDING NEW MONEY INTO CIRCULATION

Extra money needed by an expanding economy will enter circulation when government spends it. Government will spend, indeed will be obliged to spend, the exact amount of money authorized by the monetary agency charged with the job of calculating the economy's money requirements. Exactly what government spends its authorized quota of new money on will be for government to decide. That new money can take the form of cash, by virtue of the government printing notes and coins and spending them on something. Government can also pay its employees, contractors, suppliers and so on by the simple fact of the Treasury writing checks, or electronically crediting their accounts. Once the new money has entered the pockets of people, as notes and coins, or their bank accounts as numbers in the credit column, it can be spent by them. Thus the new money, by the simplest process, will enter circulation as people spend it and it will be distributed through the economy through the normal process of production and exchange.

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The Worm in the Apple by Stephen Cook OPPORTUNITIES

How might the new money work to the benefit of all? What might government spend it on? Well, there is hardly an existing service that could not be drastically improved - and at no cost to the tax payer - by a utilization of the new revenue and countless infrastructure and other projects just begging to be done. Where the money is spent will depend on the priorities on which government was elected. The two which probably spring most readily to people's minds are the nation’s health service and state pensions. It is entirely possible for government to reduce the burden on the health service through improving the nation's health, particularly through stimulating an improvement in the currently dire state of our food. However, if more needs to be spent to improve the service and the lot of those who work within it, then government has a means to do it, an expenditure of new money that will stimulate the entire economy. State pensions, likewise, can be improved without any need to increase taxation rates or take money from some other area of service. Increased tax revenues and the expenditure of new money provide ample scope for government to bring pensions up to an acceptable and just level. The provision of increased pensions will cost the nation nothing yet at the same time relieve millions of people of a great deal of hardship. Moreover, it will stimulate demand as the beneficiaries spend it. The pensioners need the money and industry needs the increased business, so why not? As we will all, if we are survivors, reach pension age sooner or later, we all have a vested interest in this. It is outrageous that many pensioners are forced to live in penury while the simple remedy for so much suffering lies neglected because there is no political will to implement a rational and honest money system. However, we are not talking about a little bit of tinkering here and there in an effort to lift a little of people's burdens. We are talking about the absolutely serious intent to lift our whole society to a new high level of productiveness and material and social well-being: to that end monetary reform provides government with vast creative opportunities. In addition to far lower taxes, far lower debt and far greater tax revenues, new debt-free revenue can be used to dramatic effect.

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The Worm in the Apple by Stephen Cook HUGE SCOPE, ZERO COST

Let us imagine some huge, ambitious and expensive project that would greatly improve our fortunes, the scope of which, however much it is desirable and to the benefit of the nation, the government could not even consider under current monetary conditions. Such a project could be the rebuilding of some industry such as our shipyards, coal, steel, electronics, aviation or whatever, the introduction of new industries such as motor vehicles that run on cheaper and healthier alternatives to gasoline, a massive education program, the building of spanking new public transport systems, wholesale conversion to alternative power sources, rejuvenation of farming or even further massive cuts in taxation. Our hypothetical project can be anything you want to imagine, provided that by survey it has been established as needed and wanted and to the benefit of the nation. Let us for the sake of argument imagine the cost of such a project is going to be $30 billion and it will take five years to build, an average cost of $6 billion per year. Under the present system government, if it could confront such an undertaking, would have to finance the project by a huge increase in taxes or a huge reduction in the tax revenue allocated to existing services or borrow it from banks and other investors. If the government decides to borrow the money at, say, 5% interest over 20 years, the total cost when the loan plus interest are repaid in full will be $60 billion. That cost will be borne by the tax payer. In other words the tax payer - or, through higher charges, the user of the new facility - will pay $60 billion for a project worth $30 billion and half of what is paid will only benefit the money lenders. The cost may turn out to be considerably higher if government, as governments do when they continually fail to balance their books in an economy perpetually short of money, fails to keep up its loan repayments and has to ask the lender to reschedule the loan. But how would it work in the post-reform era? Well, for one thing the $30 billion project will be relatively less expensive in any case because costs will be lower due to far lower debt and lower taxes. For the sake of argument though let us assume that government still needs to raise $30 billion but it is now forbidden to borrow and does not want to increase taxes, in fact is working hard to reduce taxation rates, and does not want to take the money from any of the many services it is providing for the population. It now has a new source of revenue: new money. If we imagine the economy is expanding at an average rate of 5% per annum - a modest projection for an economy relieved of its tax and debt burdens - and as a result of that expansion roughly (say) $20 billion of new money must be created and spent into circulation

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The Worm in the Apple by Stephen Cook each year. From that new money government can decide to allocate $6 billion per annum per year for five years to finance its new project. The project therefore can get done. After five years, there it is, a done deed, a new shipyard complex, transport system, alternative power source or whatever, an asset for the nation providing employment for hundreds or thousands of people. Its cost to the tax payer? Zero. Once it is complete there are no interest charges to pay, no capital sum to repay and so nothing for the user or tax payer to pay in that regard. The completed project's only costs from there on out are running and maintenance costs and so it in effect works rather like any natural resource. Even its routine running costs could be covered, if government wished, by further allocations from new-money revenues and thus the new service could be provided to the population completely free of charge! I leave to your imagination what this would mean for industry, national resurgence as an economic power, the tax payer and the user of the completed project.

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The Worm in the Apple by Stephen Cook FOOD FOR THOUGHT

I hope this illustrates the point that what is socially desirable and physically possible should be made financially feasible. Once the stops of inadequate money supply and the scarcity-think that have been so ingrained in us are removed, we shall find that the limits to what we can do are far less than we have been allowed to believe. By understanding and using money correctly, an honest, open government can steadily move the society forward and upward in a direction the society actually wants to go. This is government in a supportive role, serving the population that elected it by fully facilitating the realization of maximum human productive potential. Money is just money. It isn't very complicated. All we have to do is use it rather than letting those who create it use us. Technically, with just what we know at this moment, we have the physical means of creating unprecedented abundance and to distribute that abundance efficiently so that all men can share in what generations of thinking, inventive human beings have made possible. How about it?

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The Worm in the Apple

CHAPTER SEVEN

Closing Message

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The Worm in the Apple by Stephen Cook WHAT CAN WE DO ABOUT IT?

The first step is to understand the nature of what is going on. This book has sketched out some of the aspects of this scam. You can dig deeper into it if you wish – certainly there is available on the Internet a great deal of material for you to get your teeth into. I hope that this book has at least given you a good basic understanding without you or me, for that matter - having to study for several years so as to become “experts.” A broad general layman’s understanding by the people of the money hoax is what the money powers fear. No fraud works when the intended victims see through it and when the mechanics of their exploitation are understood by the people, they will not tolerate it a moment longer. Their new knowledge will empower them to do something about it and the fraudsters will have had it. Having read this book, you already know more about all this than the perpetrators ever wanted you to know. All you have to do is spread the word. Pass this book around, talk about it to your friends, write to your MP (don’t be surprised if you get woffle in reply) write to the newspapers, contact groups you think might benefit from this knowledge, make sure everybody knows. Form yourselves into groups and get a grass-roots movement going. Help your country and your fellow good people. Demand that government get its act together and makes the necessary sensible reforms now before it is too late. The rewards for monetary reform will be many and profound as money becomes the servant of Man and his individual, group and national goals. Free at last of debt and the burden of excessive taxation, his societies liberated from the manipulations of corrupt hidden powers that suborn his governments, Man and his communities will at last begin to realize some of the economic potential his technical genius has created. If government still won't do it, then it is not working in your interests or the interests of the broad sweep of its citizens. It is a government suborned by criminals so don't vote for it and elect one that will. I have talked much in this sketch about how the money scam affects England and America, how it has duped, ripped off, killed and enslaved their people, all but

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The Worm in the Apple by Stephen Cook wrecked their cultures and left in ruins what were once productive and enterprising nations. As an aside, it is fascinating how the controlling elites of these nations turned both into rapacious imperialistic entities, whilst by morÊ, custom and inclination neither populations were or are much interested in the empires that resulted. Be that as it may, you will find that the basic manipulations and mechanisms that have ruined those nations, have afflicted all nations similarly and are continuing so to do. We are all, in other words, in this together no matter what part of the world we live in and it is my sincere hope that as things go awry we will cease to be hoodwinked into blaming and fighting one another and will, finally, identify the correct target: a small band of criminals who have gotten hold of the world’s money system. If we can get those lunatics out of the road, we will greatly increase our chances, all of us, of working together towards the survival goals we all share. We are, after all, one race: humanity. If humanity has a fault, it is merely that it has a lunatic fringe, a small minority who are not quite right in the head and we do not demand of them the honesty and good conduct that we apply instinctively to ourselves.

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The Worm in the Apple by Stephen Cook LIFT THE BURDEN

Monetary Reform is a key step towards achieving and then protecting in perpetuity our freedom and prosperity. We simply must remove from power over our own governments and our lives small money-grubbing vested-interest cliques who care for nothing but their own wealth. Freedom and peace will not be possible unless we do. However, our task does not stop there. We must ask ourselves the questions that are raised by the historical experience of the last few centuries: How come, for instance, governments were so easily manipulated, infiltrated and suborned? How come they were so easily deflected from service of all the people and the greatest good for the greatest number? How come even great statesmen such as Andrew Jackson and Abraham Lincoln and many less well known but very worthy people were powerless to stop glorified loan sharks from taking over a entire planet and making millions of people miserable? How come wars were so easily engineered by these criminals when it suited their own purposes? How can we re-think, re-design and make improvements upon our concept of government so that the same or similar tragedies cannot happen again? It is my view that a new political entity with some fresh ideas is needed because monetary reform is but one vital strand in a broad spectrum of orderly reform we need to make in the business of how we are governed. We cannot utilize existing entities because they have become part of the problem. Almost all of them are under the influence of the money powers or some other narrow, vested interest and none, in my opinion, propose a broad or embracive enough platform of ideas to set us truly on the road to freedom for all people. In the companion work to this book, “Lift the Burden,� I have proposed such as broad manifesto of ideas. Around this or something similar, I hope a new movement will form. Such a movement will have to be based upon a broad grass roots support and be an avowed and uncompromising foe of the money powers, dedicated to their removal. A very strong sense of purpose, identity and direction will be needed. Such a political group must never, never, never finance its campaigns by borrowing and never rely upon a media that is controlled by the enemy. It must bypass these corrupted channels and go direct to and root itself in the local communities and the 361


The Worm in the Apple by Stephen Cook homes and hearts of the people, disseminating its message by personal contact, word of mouth, discussion groups and reform clubs, the direct person-to-person and group-to-group interchange of ideas. But if you stir yourself now and spread the word with a modicum of determination, you can take back your country from those who stole it from you. The very worst thing you could do about all this is nothing. Warmest regards, Steve Cook

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