Fractional Reserve Fiat Banking

Gold is the initial deposit, while paper notes function as the representative medium of exchange that can be expanded or contracted.

Gold is the initial deposit, while paper notes function as the representative medium of exchange that can be expanded or contracted.

By: Jay Dyer Dr. Carroll Quigley was Bill Clinton's mentor at Georgetown.  Quigley was the chronicler of the elite “Anglo-American Establishment,” as he titled it, having access to their provate records and archives.  His large tome Tragedy & Hope occupies an important place in the history of ideas, functioning as a modern history for insiders.  Though the book was published in 1966 with some controversy, it was republished in 1974, reportedly being given to CIA section chiefs as an explanation of why certain actions and operations were being carried out. In other words, it might have occurred to some section chiefs in the 1970s, “Why are we funding both right wing and socialist movements?”  The answer is in Quigley's Tragedy & Hope: The goal has never been some set ideology, but a world government under the auspices of “Democratic capitalism.” While Quigley's book is a great insight, it is important to recognize that the book is an establishment apologia, written from the perspective of a classical Western progressive.  For Quigley, the track the West had taken the last several hundred years was both good and bad, but largely good, as he proposes the thesis that western-progressive-democratic-capitalist-scientism was a great, noble and ultimately quasi-Christian development that would usher in a world federation of the best hoped possibilities. In this regard, Quigley was way off, if not openly deceptive, and terribly ignorant in terms of religion. This is evident to any knowledgable theologian, but for the more practically minded “officials” for whom the book was written, it probably served its purpose.  Dr. Quigley naively seems to think that the Anglo-American establishment truly wants the best for humanity, but his book never mentions the cryptocracy.  For him, the assumptions are the same as the rest of post-enlightenment western liberalism: men are basically good, and seek the betterment of mankind when properly educated.  Of course, the 20th century alone should be enough to convince anyone with half a brain that humans are self-seeking and self-destructive.  In his first few chapters he even sets the stage for modern history being developed on the basis of 19th century notions of the non-existence of evil. 

“Classical western-progressive-democratic” thought is not only not true, it’s now the facade by which the Anglo-American cryptocracy brings peaceful, democratic love bombs to the rest of the world. In Quigley’s treatise, evil Russia was defeated in the great game, leading to the rise of the western “new world order,” destined to bring scientific utopia.   Amazingly, Tragedy & Hope contains several sections that detail the funding of communism and socialism by the Anglo-establishment, not because the elites are actually communists, but because communism can have a functional purpose for obtaining certain ends.  I have detailed several times in my essays and articles that the West funded and established communism-socialism, largely for the purpose of the centralization of wealth, and its transferal overseas.

I have also detailed for years how, since my college days made clear, the “left” and “right” are a faux divide that arises from the French Revolution.  In the revolution, at the Estates General, the new provisional government was divided between the left Jacobins (who sat on the left), and the right Girondins (who sat on the right).  What everyone seems to forget or be ignorant of, is that both of these movements are “liberal” or, more properly, revolutionary.  The Girdondins favored a nobility and merchant class dominance in the new government, while the Jacobin revolutionaries thought an actual and total communistic scheme could be established.  The Jacobins and their ilk are responsible for the bloodbath of the “Committee for Public Safety.”

For Quigley, the period following the era or revolutions is thus one of enlightened progressivism and so-called freedom.  Within the first hundred pages, Quigley manages to denigrate Russia as a backward, rural nation, incapable of mounting any real opposition to the British Empire.  The “Great Game” just is that historic contest between the British Empire and Russia for control of the globe.  This is also why I recommend Malachi Martin’s book Keys of this Blood, since Martin is clearly far more intelligent than Quigley, who appears to have less than an 8th grade level understanding of western religion, something that someone who attempts to write a massive tome on the West should obviously have a better sense of.  Martin’s book is far more revelatory and instructional.  In both, the “Great Game” is outlined in no uncertain terms, yet Martin includes the Vatican, something Quigley gives little to no mention of.  Again, how is someone going to write a modern history of the West and be ignorant of a belief system held by a billion people?  It is a similar situation in Norman Cantor’s The Civilization of the Middle Ages: Historians make terrible theologians.

Aside from all that, it is also relevant that within the first fifty pages, Quigley lays out the entire international banking cartel system that the world presently lives under.  Yes, the centralized federal reserve system in almost every nation was established, by design, as a control mechanism.  With Quigley, there appears to be a slightly critical approbation of the system, yet oddly the very thing he appears to be critical of is the notion of currency being tied to a gold standard. Quigley has no problem outlining the ability of the central banks to set up fractional reserve fiat money issuance, because he appears to share what might be termed the “Keynesian” idea of government stimulus.  Quigley writes as if inflation is a good thing, and deflation a bad thing.


This is yet another progressive idea based on supposed mathematical ideals and abstract notions about how things ought to work in any given system, in contrast to how humans actually work.   Yes, it would be nice if things worked that way, just as it would be nice if Quigley’s new world order was run by perfect angels who had humanity’s betterment in mind.  In reality, humans are selfish and governments (owned by the central banks) are corrupt.  The Bank for International Settlements, the central bank of central banks, even issues reports and policy papers showing that quantitative easing and infinite stimuli don’t work, but just destroy the purchasing power of the dollar or currency in question.  Ironically, Quigley wrote his work prior to the Nixon “Shock Doctrine” of 1971, removing the nation from a gold standard, which Quigley himself admits leads to hyperinflation and unhinged “money printing.”

In reference to the establishment of this modern banking system, Quigley explains:

“Today we call such pieces of paper gold certificates.  Such certificates entitle its bearer to exchange it for its piece of gold on demand, but in view of the convenience of paper, only a small fraction of certificate holders ever make such demands.  It early became clear that gold need be held on hand only to the amount needed to cover the fraction of certificates likely to be presented for payments; accordingly, the rest of the gold could be used for business purposes, or, what amounts to the same thing, a volume of certificates could be issued greater than the volume of gold reserved for payment of demands against them.  Such an excess volume of paper claims against reserves we now call bank notes.

In effect, this creation of paper claims greater than the reserves available means that bankers were creating money out of nothing.  The same thing could be done in another way, not by note-issuing banks, but by deposit banks.  Deposit bankers discovered that orders and checks drawn against deposits by depositors and given to third persons were often not cashed by the latter but were deposited to their own accounts.  Thus there were no actual movements of funds, and payments were made simply by bookkeeping transactions on the accounts.  Accordingly, it was necessary for the banker to keep on hand in actual money (gold, certificates and notes) no more than the fraction of deposits likely to be drawn upon and cashed; the rest could be used for loans, and if the rest could be used for loans, and if these loans were made by creating a deposit for the borrower, who in turn would draw checks upon it rather than withdraw it in money, such “created deposits” or loans could also be covered adequately by retaining reserves to only a fraction of their value.  Such deposits also were a creation of money out of nothing, although bankers usually refused to express their actions, either note issuing or deposit lending, in these terms.” (Tragedy & Hope, pg. 48)

So there you have it.  The essence of the modern economic system is what’s called fractional reserve banking, which gives rise to fiat money printing. Fiat money printing is possible when a single entity has control of the issuance of currency, leading to a monopoly on the money power. A monopoly on the money power through the issuance of currency means being forced at the point of a gun to use the central banks’ currencies.  All of this is done under the auspices of supposedly “regulating” the economy, yet the daily examples of massive financial scandals demonstrate how absurd this idea is.  This system has evolved into an international kleptocracy that will inevitably self-destruct.

13 Comments on Fractional Reserve Fiat Banking

  1. Long time reader, first time commenting. Excellent lead in to the many financial changes taking place in the world today. There is the illusion of a wealth shift taking place, from the West to China and the other BRICS countries, but it is simply that, an illusion. Let’s not minimize the hardship of those suddenly finding themselves destitute and homeless, especially in America, but realistically, they have lived the high life on the broken backs of the so called “emerging economies”. In the big scheme of things, it’s just a reshuffling of the card deck. As you stated indirectly, the real power resides with the Bank for International Settlements. The BIS has authority over most, if not all the worlds central banks, including in China. One could reason that China has been financially controlled since the Opium Wars, and remains controlled today. The same old money wins as the pawns are sacrificed and casually rewarded. Such as the curse of materialism is a reward. I would very much enjoy reading an expanded and extended article from you on some of these issues, including the Petro Dollar, and how it relates to the collapse of western consciousness. Eastern consciousness will be destroyed next, thus the wealth/materialism shift. Thanks for all your hard work and efforts in attempting to enlighten your fellow man. There’s not many of us, but we’re around and reading, learning, processing, and laughing along with you. Cheers!

  2. Peter Grafström // March 12, 2014 at 9:50 am // Reply

    I beg to differ ever so slightly with Jay
    Jays characterization of Quigley doesnt seem to take into consideration the difficulties for him to get his whistleblowing works published. The angloamerican establishment written in the late 40s wasnt published until after his death. Tragedy and hope(TH) wasnt allowed to be printed in large numbers, before the publisher withheld the rights preventing further copies to be made available. Quigley had a good deal of insight into the workings of the angloestablishment and it seems to me he knew what they would like to hear. Since his mission was to expose them not to please normally thinking progressive westerners it was necessary to throw some bones to the wolfs. Such as his seemingly condescending view of Spain and of the countries south of a virtual line on the world map going from Pakistan to Peru, south of which people are said to be backward as a consequence of having had Arab influence. He says that this is understood but not spoken of.
    Jay also took note of a similar view regarding the russians.
    Did he have a genuine urge to express such negative views or was it a way to convince the censors he was one of them. A natureborn imperialist. Any nuanced view of religion that Jay considers important would have made Quigley look less conventional. And thus more suspicious in the eyes of the angloestablishment.
    The book doesnt contain any references. It looks mostly like a rather conventional text of an establishment man. The inflammatory part stands out but my guess is he gambled that he would manage to slip it passed the scrutiny of the censors and that he might have a chance to continue influencing those elites. Saying he approved of their aims was a way to increase the chances for changing them. But this book proved to put an end to his chances of influencing them. He was no longer invited to hold lectures in high circles. They probably didnt believe he approved of their aims. And neither do I. It was an orwellian imperialist conspiracy designed by the british and it only made sense if it was held secret. We are still living under this tyranny today, the mainstream media and academic establishment are instruments for brainwashing for the interests of empire. Quigley is the most important whistleblower I am aware of and without his exposure of the british conspiracy it might have remained hidden for everybody.
    Gary Allen called Quigley during a radio program and wanted him to comment but Quigley didnt acknowledge any familiarity with his own book. Quigley clearly felt he had to keep his head down. One individual who knew Quigley said he thought of the elites he was supposed to approve of as evil.
    (And Gary Allen died of liver cancer at the age of fifty.)

  3. Have you read Modern Money Mechanics? That would make a nice a nice addendum to this article.

  4. Is Tragedy & Hope an expose or apologia for the Anglo-American Empire? Perhaps it is both. Quigley, an Irish American, had been educated in Anglophile institutions and enjoyed a successful academic career serving the empire. He was a professor at Georgetown, a nominally catholic university that had sold out to the US State Department (and CIA) and enjoyed consulting work for the DoD. The Irishman Quigley had internalized the values and beliefs of his oppressors. Despite his erudition, Quigley was very much a man of his times and therefore his views are laden with the biases and presumptions that were common in academia in middle 2oth century. The posthumous publication of The Anglo-American Establishment in 1981 suggests that he had become more critical of the elite in the latter days of his career. Quigley died supposedly of natural causes in 1977 at age 66. .

    • Peter Grafström // June 26, 2016 at 11:53 am // Reply

      If you listen to his interview from 1974 it is clear that the posthumous book (written in the 40s) wasnt published earlier because countless publisher’s refused. And Tragedy and Hope met with huge obstacles as well. The publisher was ordered to destroy the original plates and books in pirate copies during the 70s were later published by someone.
      You seem to assume that he couldnt have acted with the intention of both reaching out and simultaneously be able to keep his insider roll to influence part of the elite and maybe achieving a change of heart in their ranks.
      Few have like him had access to those private archives and been able to publish it. That he would have to be somewhat pragmatic about it is no surprise. Diplomats do it all the time. His exposure of the critical role played by the central banks and criticism about that proves that he had not all become servile to that system. He didnt write so much about how those angloamerican networks lay behind every major upheaval of the 20th century but he proved their existence motivation and farreaching influence over every aspect of western power including its influence and control of the left.

      • There are all these tales of troubles and plates but where is he critical? Where is he exposing, and not instead defending? Why is the book allowed freely? I see it no different than a Brzezinski text or any other of its kind.

      • Peter Grafström // June 26, 2016 at 4:54 pm //

        He pieced the puzzle together like no one else had before him. He showed the structure and gave the necessary info for anyone who would otherwise have doubted that such an intricate conspiracy actually existed. Docherty & Macgregor’s recent excellent book about the preamble to the first world war makes good use of Quigley’s books.
        Seing that application of Quigley’s work might make it easier to appreciate its importance.
        And think about what might have happened to Quigley, had he not stopped after exposing the structure and gone on to feed you guys with the juicier details of how the round tabler’s caused all the great upheavels assuming he knew. Including virtually creating every aspect of the nazi regime. As it were he was just given the silent treatment like all wellinformed critics whose account they cant refute.
        And what he reveals about the central banks is still not demonstrably understood by most historians. Noone truly lojal to the angloamerican establishment could possibly think there would be any way to reconcile the truth with that lojalty. So in conclusion he didnt like it at all but hoped to see it changed. But couldnt say so. What he said about the arabs was probably done to feed the censor-monkey’s if you ask me. His lack of footnotes too.

      • thkelly67 // June 26, 2016 at 4:04 pm //

        Yes Quigley reveals much but throughout his book he defends the Anglo-American Establishment – The Shadow Empire (City of London, Wall Street) is “civilization” while anything outside its orbit is barbaric. Supposedly he was critical of Round Table’s secrecy but not of its objectives. “Hope” resided in continued Anglo-American domination of the planet. “Tragedy” was the collapse of that order.

      • Democracy – the great god of the modern masses, and the favored tool of the money power.

      • Peter Grafström // June 26, 2016 at 5:01 pm //

        See my answer to jay. He probably fed the censor monkey’s in the hope to pass the needle’s eye of censorship. He knew how complete the control of every significant publisher was. And he only managed to have a small first edition printed. Then the elites realized what they had let loose. 1368 pages whereof perhaps only 150 pages are problematic for big brother angloamerica.

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