The Creature of Jekyll Island Chapter 3 by G. Edward Griffin

Hey guys today I am going to continue the breakdown of The Creature of Jekyll Island. Today's post is for Chapter 3 named Protectors of the Public. Lets get to it...

This chapter focuses on real life examples of the Bailout Game that was applied by Big Bankers in US history. Eight examples are given:

1. Penn Central: Resulted in the railroads becoming "nationalized" which is euphemism for becoming a black hole into which tax dollars disappear forever. AMTRAK is created in 1971 and is operated under political control and operates at a loss today. Whereas CONRAIL on the other hand, was returned to the private sector and has been running on profit- paying taxes instead of consuming them.

2. Lockheed: The nation's larges defense contractor was facing bankruptcy and needed a bailout. Taxpayers become co-signers to the account and the government now had a powerful motivation to make sure Lockheed would be awarded as many defense contracts as possible, even though other private defense contractors operated more efficiently (manipulation of the free market).

3. New York City: NYC had become a mini-welfare state in which success in city politics was achieved by lavish promises of benefits and subsidies for "the poor." Municipal fringe benefits were twice as generous as those in the private industry. On top of this were free college educations, subsidized housing, free medical care, and endless varieties of welfare programs. NYC became bankrupt as a result and in 1975 a bill was passed by the Treasury to make direct loans to the city up to $2.3 billion dollars. This amount was more than DOUBLE the size of the current debt to the banks. Banks used the argument that if NYC went bankrupt it would trigger an international financial crisis. The banks won the argument and continued to earn money on the interest.

4. Chrysler: In 1978 Chrysler was near bankruptcy. Congress was told that the public would suffer if the company folded and it would be a blow to the American people's way of freedom if choice was limited from 3 to 2 makes of automobiles. Congress guaranteed money and the banks previously uncollectable debt was converted into a taxpayer-backed, interest bearing asset.

5. Commonwealth Bank of Detroit: Funded most of its growth through loans from another bank, Chase Manhattan in NY. Commonwealth went belly up and Chase seized 39% of its common stock. FDIC bailout intervention was needed to help Chase limit large losses. As a result Chase only absorbed minor losses.

6. First Pennsylvania Bank: In 1979 become insolvent and it was 6 times the size at Commonwealth Bank of Detroit. FDIC intervention was needed again to "protect the public." They stated that the national economy was at stake, perhaps even the entire world.

7. Continental Illinois: In 1982 became insolvent even though it was the nation's 7th largest bank. Fed Chairman Volcher told the FDIC the world economy would be ruined by a bank failure of this magnitude. FDIC assumed $4.5 billion in bad loans and took 80% ownership of the bank in form of stock. In effect, the bank was nationalized, but no one called it that.

8. 2008 All major banks, AIG, Automobile companies, and Banks of Other Nations: This is the case I want to go more in depth on.

By 2008, the engine of destruction was running at full throttle. Decades of low interest rates had lured homeowners, speculators, and lending institutions into the real estate market where fortunes could be made by constant rising prices. Knowing that they would be bailed out by the Fed if the they got into trouble, large banks threw caution into the wind and offered loans just about anyone who would sign the documents, regardless of their ability to make payments. Make as many subprime loans as possible, package them into large blocks of similar loans, give the packages impressive names such as "Prime Diversified Fund," and then sell them to unsuspecting investors. Two of the largest conduits for this scam are Fannie Mae and Freddie Mac, loan re-packers sponsored by the government.

The scheme worked initially due to the Fed's artificially low interest rates creating a real estate boom with rising home prices. Initial buyers who couldn't afford to make payments were able to sell their properties at a profit and come out ahead. Foreclosures were rare. However, as with all booms caused by manipulation of the free market, the real estate boom came to an end, and when it did, it was compounded by rampant inflation, high taxes, crippling regulation, and loss of jobs to other countries, all of which combined to create an economic recession. Foreclosure rates climbed and Fannie Mae and Freddie Mac were in trouble. Their loans were not performing and they were defendants for hundreds of law suits from institutional buyers of their fraudulent investment packages. The Federal Reserve was needed once again for the old bailout routine. This time to the tune of trillions of dollars created out of nothing.

In September of 2008, the Federal Government gave over $100 billion to Fannie Mae and Freddie Mack, and loaned over $85 billion into AIG Insurance to keep it in business. The money was simply created by the Federal Reserve. No one seriously expected repayment. The cost was passed to consumers in the form of future inflation. (Incidentally, Fannie Mae and Freddie Mack previously had given $4.8 million in campaign donations to Congressmen.)

One of their high priority strategies was how to pay bonuses to themselves without calling them that, because taxpayers were upset over seeing their hard-earned money going to executives as rewards for running their business into the ground. AIG used the term "Retention Payouts." Later, when the public demanded a legislative limit to retention payouts, the executives dropped the word games and simply increased their salaries and perks.

In October 2008, Congress passed a $700 billion bailout bill to the save the largest banks in the nation on the verge of bankruptcy. Congressmen who voted for this had received 54% more in donations from banks than those who voted against it. The White House urged news services to stop using the word "bailout" and say "rescue" instead. They complied. Some estimates indicated that real figure given out by the Federal Reserve is around $5 trillion. That represents an additional $16,500 in loss savings and purchasing power for every American. GMAC, the financial services division of General Motors, was allowed to change its structure to a commercial bank so it also would be eligible for bailout. The Treasury announced that the budget deficit would be $1 Trillion, the highest in American history- up to that point.

Among bailout recipients, it's common to see the money used in ways that destroys jobs for the same American taxpayers who pay the bill. America is viewed as a cash cow that is milked regularly to send the money overseas. Organizations are consciously pursuing policies designed to lower the economic stature of America so it can be more comfortably merged into global government. Taking money from American workers to build up the economies of foreign countries has done much to advance this goal.

This incredible record of self dealing and plunder of the public treasury was given full attention in the press, which led to the national outcry against "greedy" corporate executives. Scores of politicians made impassioned speeches about the need for new laws and regulations to tame this "bonus monster." It was the perfect decoy to divert public attention away from the greater issue. The fact that million dollar bonuses for executives who led their companies into bankruptcy are worthy of attention, is microscopically small compared to the fact that these companies were being bailed out in the first place, that the process was unconstitutional, and that the astronomical amount of money involved literally was killing the nation. The media has framed the debate so that the really important issues were not even part of it. To "let the corrupt banks fail and let the economy recover in the absence of fraud" was not allowed in mainstream debate.

The new business model for America is clearly recognizable. Its dominant feature is the merger of government, real estate, and commerce into a single structure, tightly controlled at the top. It is the same model used in Soviet Russia, Nazi Germany, Fascist Italy, and Communist China. When Senator Bernie Sanders asked if Fed Chairman Bernanke would provide the names of the financial institutions that received bailouts, Bernanke flatly stated, "No!" He did not want to reveal their names because it might "cause the public to lose confidence in those banks and withdraw their deposits, which would further problems."

Rumors were flying that billions of dollars had been sent overseas to banks of other countries, and such info would not have set well with American citizens. Two months later, the IMF announced it was bailing out banks in Greece to the tune of $145 billion, 20% of which was provided by the US. American citizens were giving $8 billion to Greek banks. The following week, the Federal Reserve announced it would bail out European banks without Congressional approval. The Fed was now the money machine for the world. Money for future bailouts in other countries will be created by the Fed at the expense of the American Citizen and moved to central banks of those countries to be distributed to their commercial banks. Big news that the mainstream media said nothing about. If this continues, it will crush what is left of the American middle class. The Federal Reserve needs to be abolished because it is a cartel operating against the public interest.

As I write this post, BTC is over $3200 and the crypto market cap is over $111 billion. Keep supporting cryptos to break the chains of the Federal Reserve and Central Bankers. How many more bailouts will need to occur before we realize that the Federal Reserve is a large part of the problem? They have failed in the past and will continue to fail in the future. Well there you have it. I hope you enjoyed. Feel free to upvote, comment, and resteem to share with the community.

Chapter 1 Breakdown

Chapter 2 Breakdown

Chapter 4 Breakdown

Chapter 5 Breakdown

Chapter 6 Breakdown

Take care and stay safe out there,
Pete