The purpose of this thread (and later discussion) is almost a lesson plan in how the world works with respect to money and politics. Those who manage to separate several hours of their time and simply go through most all the links in this post will put a vast amount of solid and simplified knowledge in their head. It can be done in a day with lots of time left over, or spread out over a few days. This is a kind of shortcut plan for those who have been mystified by the obscure and needlessly complicated world of finance. They will be able to move on to other areas of finance with a solid base of understanding. Call this premise learning.
A word of caution. All writing on finance is tinged with an agenda and this is no exception. However, the agenda is isolated (which is easy because it is glaring: basically fiat money and trust in politicians) and it is covered below. Also, this is not a complete presentation on anything. There are gaps, as there are with all fundamental discussions. Other such presentations for Objectivist and libertarian-leaning laypeople on money and politics might exist that are just as easy to understand and chock full of essentials, but I have not encountered any.
There is a video that was linked to on this thread on RoR that I watched and found fascinating. (Hat tip to the guy who started the thread, which is a pseudonym for a person who used to use even another pseudonym and who doesn't like me, but the hat tip still stands. It is a wonderful video and I am grateful he posted it.)
The Money Masters - Part 1 of 2
The Money Masters - Part 2 of 2
These links are the versions I saw, but there is some problem with a small skip in the second one. The full thing is a three and a half hour documentary narrated by Bill Still. It can be seen for free on the links above (and the one below) and it is worth every minute invested in watching it. The link below is to the full three and a half hour documentary on Google video. The image is a bit fuzzier than the two part version and this is probably due to encoding a VSH version.
The Money Masters - How International Bankers Gained Control of America (full version)
I cannot think of a better presentation than The Money Masters for understanding what central banking and fractional reserve banking mean and what their roles are in our own lives. This documentary is simply stunning in its teaching method and research. Milton Friedman even liked it. Most of all, IT IS NOT BORING. I fully intend to see it several more times.
Here are some related links, all of which bear visiting.
Money as Debt: This is a companion video for viewing after seeing The Money Masters. It is a 47 minute documentary narrated by Paul Grignon. I have not seen this as of this posting, but I fully intend to in the near future. I will report on it in the thread. (Curiously, this copy was furnished by http://www.chinaworker.info, which looks like a really interesting but whole other can of worms.)
EDIT: The original link was broken. Here is a valid one: Money as Debt
The Money Masters: The official website where you can purchase a DVD if you wish (you can also get Money as Debt). None of the DVDs are expensive.
Money as Debt: The official website of Money as Debt, where it also can be purchased. There are some highly interesting links on this site.
Bill Still: The Wikipedia article on Bill Still, the narrator of The Money Masters. He has a very interesting history. I would not mind meeting this guy someday.
Here are the 27 segments of the The Money Masters (gleaned from the site here where a synopsis of the film is given). Headings are provided by the Wikipedia article on the film (which is otherwise not good at all as of this posting). The headings pop up as titles during the film.
If you have ever wondered what Alan Greenspan was doing and it all seemed vague, this documentary gives you information that makes everything fall into place. Despite Greenspan being appointed by the President, The Federal Reserve is a private company (owned by banks) holding a government-imposed monopoly on printing paper dollars and creating electronic dollars. It exists to buy US Treasury Bonds (among other things).
The Money Changers
The Goldsmiths of Medieval England
The Bank of England
The Export of Private Central Banking to America
The Rise of the Rothschilds
The American Revolution
The Bank of North America
The Constitutional Convention
First Bank of the U.S.
Napoleon's Rise to Power
Death of the First Bank of the U.S. / War of 1812
Andrew Jackson Kills the Second Bank of the U.S.
Second Bank of the U.S.
Abe Lincoln and the Civil War
The Return of the Gold Standard
J.P. Morgan / 1907 Crash
The Rise of the Federal Reserve Act of 1913
Fed Act of 1913
J.P. Morgan / WWI
Roaring 20s / Great Depression
FDR / WWII / Fort Knox
Conclusion and Monetary Reform Act
World Central Bank
The film points out (emphasized by a quote by Thomas Edison) that if the US government has the power to issue bonds, it surely has the power to issue dollar bills. Yet it prefers to pay a middleman to do it. This is where fractional reserve banking comes in. Essentially, with fractional reserve banking, a bank holding one dollar can loan out ten dollars in credit and hope that not everyone will want the actual dollar bills all at the same time. How all this works is quite an interesting scheme. The banks having the power to print the money helps quite nicely.
To be fair and give another view of the Federal Reserve, see the links below.
In Plain English: An enormously interesting elementary tutorial on the Saint Louis branch site that I once went through.
FED 101: Another highly interesting FED-sponsored resource I just came across doing research for this post.
But frankly, although these tutorials are interesting and easy to understand, they are vastly more informative after one sees The Money Masters. That film really gives you the context and everything suddenly makes much more sense as you go through the tutorials. I just did some spot jumping and this was exactly my result as compared to when I did the "In Plain English" tutorial several years ago.
Now here is the rub with the film. Not everything is palatable to an Objectivist view, especially not the endorsement of fiat money. The idea of backing off the gold standard because gold reserves have become too concentrated in few places makes sense (albeit there is debate on this), but I am not convinced to abandon the idea altogether (for a number of reasons). There are some other points and they are summed up quite well by G. Edward Griffin. Here are a couple of links.
CREATURE FROM JEKYLL ISLAND: A Second Look at the Federal Reserve by G. Edward Griffin: An outstanding book about the founding of the Federal Reserve, which arose out of a meeting of a Privileged Few on Jekyll Island way back when. To be fair, my appraisal comes from reading about the book on the web, where it is highly praised by people I respect. I have not yet read it. What is interesting is that this book is offered for sale on the site of The Money Masters, yet Griffin is the person who provides some of the real warts to the film.
MEET BILL STILL, FIAT-MONEY ADVOCATE: An analysis of the documentaries Money Masters and Capital Crimes by G. Edward Griffin: (Note: Apparently Capital Crimes was the first version of The Money Masters.) With all of the good in The Money Masters, Griffen pours a much needed bucket of cold water over the flaws. His main criticism is against fiat money, and the film's the treatment of gold, Lincoln's greenbacks, tally sticks and trust in politicians. So I think this essay is a much-needed and essential supplement to the film.
Also, there are some gaps, as I mentioned. One of the most glaring for me was in the explanation of how the FED creates money out of nothing. This is given in the film, but the quote below is from the FAQ on the website.
Step 2 for me is so vague that it needs clarification. In terms of bonds, how does "whomever is offering them for sale on the open market" initially acquire them? But as the gap is specific and does not invalidate the other material, it is easy to research. So in a sense, even the gaps in this material can be useful.
Question: How does the Fed “create” money out of nothing?
Answer: It is a four-step process. But first a word on bonds. Bonds are simply promises to pay — or government IOUs. People buy bonds to get a secure rate of interest. At the end of the term of the bond, the government repays the principal, plus interest (if not paid periodically), and the bond is destroyed. There are trillions of dollars worth of these bonds at present. Now here is the Fed moneymaking process:
Step 1. The Fed Open Market Committee approves the purchase of U.S. Bonds on the open market.
Step 2. The bonds are purchased by the New York Fed Bank from whomever is offering them for sale on the open market.
Step 3. The Fed pays for the bonds with electronic credits to the seller’s bank, which in turn credits the seller’s bank account. These credits are based on nothing tangible. The Fed just creates them.
Step 4. The banks use these deposits as reserves. Most banks may loan out ten times (10x) the amount of their reserves to new borrowers, all at interest.
In this way, a Fed purchase of, say a million dollars worth of bonds, gets turned into over 10 million dollars in bank deposits. The Fed, in effect, creates 10% of this totally new money and the banks create the other 90%.
I cannot recommend all this material enough. When we deal with the area of finance, there is always some agenda hiding somewhere that obscures the actual workings of the system (I have this problem when I look at the material on LewRockwell.com, for instance). As I stated, there is an agenda in this material, also, but it is separated and put in its place. The essential outline of the world's monetary/political system is as clear as a summer day.
I believe that, despite not being perfect, this is a a first-rate starting point for understanding the relationship between money and politics. It even filled in some of the gaps left over from Capitalism: The Unknown Ideal in my own thinking.