the Federal Open Market System flowchart, such as , correspond with the numbers in the Narrative below. The phrase "Mandrake Mechanism" for the deception of the Federal Reserve banking system was coined by G. Edward Griffin in his landmark book "The Creature From Jekyll Island: A Second Look at the Federal Reserve". It refers to a comic strip character from the 1940s called Mandrake the Magician, whose specialty was creating things out of nothing, then making them disappear back into nothing.
The
federal government decides it need some money, so it adds ink to a piece of paper and creates designs on the paper.
The
federal government calls the paper a Treasury Bond or Treasury Note. These are IOU's to The Federal Reserve ("the Fed").
To convert the IOU's into paper bills, the bond or note is given by the
federal government to the Fed where it is classified as a Securities Asset.
To the
federal government (in other words, you and me), the Treasury Note is debt. To the Fed, the Treasury Note is an asset because it is assumedthe government will repay its debt. This assumption is based on the government's ability to fleece income tax payers. This Securities Asset can now be used to offset a liability, which the Fed accomplishes by turning on their printing press, putting ink and designs on another piece of paper, and calling it a Federal Reserve Check.
There is NO MONEY in ANY ACCOUNT to cover this Federal Reserve Check. The Fed shareholders and governors avoid prison because Congress wants the money and this is the easiest way to create it.
The Federal Reserve Check is given by
the Fed to the federal government.
The
federal government endorses the Federal Reserve Check.
The
federal government deposits the Federal Reserve Check into their bank account at one of the 12 Federal Reserve Banks where it becomes a Government Deposit.
The Government Deposit is used to pay federal government expenses.
The federal government expenses are paid to many different
recipients, such as businesses, entrepreneurs, etc, accomplished by writing Government Checks.
These Government Checks are deposited by the various
recipients into their individual Commercial Bank accounts.
These deposits are called Commercial Bank Deposits, and are treated as assets by the thousands of
commercial banks.
The Commercial Bank Deposits are reclassified by the
commercial banks as Reserves. These Reserves are liabilities offset by the Commercial Bank Deposits on their accounting books.
Dependent on the "reserve ratio" determined by
the Fed (for the flowchart, a 10% reserve ratio is used), the commercial banks are required to keep only 10% of their Commercial Bank Deposits on hand in case of withdrawal by account holders. The other 90% is considered "available for lending'.
The Reserves that are available for lending are termed Excess Reserves. They generate a myriad of different Loans, which GREATLY EXPAND the money supply.
When the
recipients of the loans deposit the loan proceeds into their bank accounts, the deposits are treated like new Commercial Bank Deposits, and the entire process repeats over and over and over again. The total fiat money generated by this mechanism is approximately 10 times the size of the original debt created by the federal government due to the 90% excess reserves. This is what the international bankers and economists call the beauty of their operation, but in reality it what our founding fathers warned would be our downfall.
Will we ever get a president and representatives into our government who will realize this, or will we meet our fate as a nation? Only time will tell. . .
, correspond with the numbers in the Narrative below. The phrase "Mandrake Mechanism" for the deception of the Federal Reserve banking system was coined by G. Edward Griffin in his landmark book "The Creature From Jekyll Island: A Second Look at the Federal Reserve". It refers to a comic strip character from the 1940s called Mandrake the Magician, whose specialty was creating things out of nothing, then making them disappear back into nothing.
