As part of removing the gold standard, Roosevelt had laws passed forcing US citizens to give all of the gold and silver that they owned to the government, in exchange for an equivalent amount of paper dollars. Americans’ faith in the new system was severely tested the following year when the government devalued the dollar relative to gold, thus causing all who had made the exchange to lose 41% of the value of their money.
On July 22, 1946, at the end of WWII, an agreement was signed at a conference between 44 nations in which the other countries agreed to value their currencies in relation to the dollar, rather than gold, silver, or anything else. The US then set the value of the dollar at $35 per ounce of gold, and agreed to redeem dollars held by the central banks of other nations in gold upon demand.
However, this led to a steady loss of US gold reserves, until finally, in 1971, President Richard Nixon closed the “gold window”, announcing that the holdings of foreign central banks would no longer be redeemed for gold by the US government.
This was the final step in abandoning the gold standard. Now the value of the dollar floats freely in relation to foreign currencies, with no fixed standard of value. The value can only be manipulated by the market forces of the economy, and by the actions of the Federal Reserve. The result has been rapidly expanding inflation, which began during the Nixon years, and which has been felt by all the foreign currencies that were pegged to the dollar.
Many of these currencies have repeatedly failed, and the governments of their countries remained continually insolvent, ever since.
So the dollar that we now use is one backed entirely by faith alone – the public’s faith in America’s economy, and America itself.
The economies of other nations are dependant upon this faith as well. For if no one believed in the power of the dollar – if it was not universally accepted as a form of payment – then it would have no value.
As Jack Weatherford writes in The History of Money:
“The government will not redeem a dollar bill for anything other than another dollar bill. The dollar is simply fiat currency.
The dollar rests on the power of the government and the faith of the people who use it – faith that it will be able to buy something tomorrow, faith that the US government will continue to exist and to accept dollars in payment of taxes and pay them out in expenses, and faith that other people will continue to believe in it. Aside from that faith, nothing backs up the dollar.”
Likewise, William Greider wrote in Secrets of the Temple: How the Federal Reserve Runs the Country that:
“Above all, money [is] a function of faith. It [requires] an implicit and universal social consent that [is] indeed mysterious. To create money and use it, each one must believe, and everyone must believe.
Only then [do] the worthless pieces of paper take on value. When a society [loses] faith in money, it [is] implicitly losing faith in itself… The money process… [requires] a deep, unacknowledged act of faith, so mysterious that it could easily be confused with divine powers.”
Of course, even before paper money became widely used, the worth of gold and silver coins rested on a similar social contract – a common, agreed-upon value.
But the difference is that gold and silver have intrinsic value, and when these coins were used in the past, their value was roughly equal (when made properly) to the value of the metal of which they consisted.
But our current paper dollars are “fiat currency” – representations of wealth that have no physical existence until they are used to purchase something that does – in which case, they cease to be dollars.
The use of paper money was not new to America in 1935. They have been used throughout our history, beginning with the “continentals” which financed the Revolutionary War, and which were backed with nothing more than the promise that America would win the war, and begin collecting taxes from its citizens. A similar gamble was taken during the Civil War, which was financed by “Greenbacks”, forebears of the modern paper dollar.
In addition to these two currencies, each of which were issued by the federal government, there were, throughout the United States’ early history, many paper dollars in circulation that were issued by privately-owned banks throughout the various states.
These dollars differed widely in appearance from one another, which led to massive counterfeiting, and when the banks failed, which they often did, the dollars became worthless. Numerous measures were taken by the federal government in attempts to control this problem. Finally, in 1913, a series of banking collapses inspired the creation of the nation’s new central bank, the Federal Reserve, and a new banking and monetary system, the Federal Reserve System.
The Federal Reserve is now the United States’ national bank, and it is both quasi-governmental and privately-owned.
It sets the basic operating policies for all of its member banks (which is most of the banks in the U.S.), and provides them with their money supply. The process they use to supply this money, “fractional reserve lending”, is not new. It’s almost as old as banking itself.
But when backed by a powerful dynamo like the Fed, which created tremendous faith in the integrity of the money supply, the new money system became an unstoppable force. In fractional reserve lending, a bank can take the money from its depositors’ accounts, and lend it out to various persons or institutions on interest. It can loan out the vast majority of the money deposited (say, 87%), leaving only a fraction (13%) in the bank’s vaults. This fraction is called the “reserve”, and it is the only “actual” money sitting in the bank, backing all of the various loans – the only money that is really ready to be withdrawn, should the depositors choose to withdraw from their accounts.
When the loans are paid back, the bank earns a profit from the interest. Thus, the bank has caused its depositors money to multiply, and has kept the difference for itself, essentially creating money out of nothing. If the bank has loaned money to another bank or financial institution, that institution can then loan it out and create even more money out of nothing. Or they can loan it to a person or business who can use it earn more money by producing goods and services that are sold.
This money is then spent into the economy again. Thus the money supply multiplies exponentially, and the economy itself acts as a money multiplier – a manna machine, in a way. Money can always be used to make more money.
Now since the Federal Reserve is the point of origin for this money, its initial injection into the system is sometimes called “high-powered money”, because it effects the whole economy. It is the tiny mustard seed which causes the rest of the money supply to grow. The interest rate which the Fed chooses to set for the money it lends determines how much money will be borrowed by other banks at that time, and also determines the rate that those banks will charge for loaning money.
This is the primary way in which the Federal Reserve controls the money supply, and thus, as much as possible, the American economy: too much money being loaned out (and thus created) leads to inflation, and too little leads to recession. When the Fed first loans it out to the member banks, the money is “created”, and each time those banks lend it out, they are breeding more.
As Martin Mayer writes in The Fed: The Inside Story of How the World’s Most Powerful Financial Institution Drives the Markets:
“…The Fed’s actions were always and necessarily pretty small by comparison with the effects desired, and their effectiveness was explained by the operation of a ‘multiplier’ inherent in a system where banks had to keep ‘reserves’ against some fraction of their liabilities.
The bank that received the Fed’s ‘high-powered money’ might lend 90 percent of it, and the bank that received the proceeds of that loan would lend 90 percent of that, producing deposits in another bank that would lend 90 percent of that, etc…”
Some see the way in which fiat currency, especially paper and electronic money, can be simply “created, as nothing short of magic.”
Scottish philosopher John Law wrote in his 1705 book, Money and Trade Considered with a Proposal for Supplying the Nation with Money, that he had discovered the “Philosopher’s Stone” of the alchemists, which could purportedly turn lead into gold, or dross into something valuable. The key to alchemy, he said, was the printing of paper money, and in 1715 he was hired by the French government to put his theories into action. Law was put in charge of France’s national Banque Royale, as well as the Mississippi Company, which gathered investments from French citizens to finance operations in French Louisiana, promising the investors profit payments.
He set up a paper-passing scheme between the bank and the Company, in which investors could borrow paper money printed by the bank to invest in the Company. They were expected to pay back the bank in gold, while the Company paid their profits in the bank’s paper money, which was supposedly redeemable in gold. The whole scheme collapsed dramatically in what became known as “the Great Mississippi Bubble”, and Law fled in disgrace, dying shortly thereafter. But his ideas went on to influence German writer Wolfgang von Goethe.
In Goethe’s classic play, Faust, the title character and his teacher, Mephistopheles (the Devil), gain the favor of the emperor by offering him the secret of alchemy: how to create wealth by printing paper money. Soon the emperor presides over a robust economy and a licentious, materialistic people. But the currency eventually collapses, just as all the Devil’s creations turn out, in this play, to be illusions.
It is my belief that the Freemasons and other occultists who have been responsible for creating the United States, designing the dollar bill, and engineering our economy have understood the principles of alchemy, and have purposely chosen to construct our economy upon these principles: the principles of creating worth from worthlessness, and for creating a large volume from a small one, using the power of faith. I explain my theory in much greater detail in my book Solomon’s Treasure: The Magic and Mystery of America’s Money.
In this book, I demonstrate that the creation of money by the Federal Reserve, and its exponential multiplication by the procedures of the banking system, is analogous to the creation and multiplication of gold in alchemy. The power of money to transform almost any thing or situation into another is similar to the alchemical power of the so-called “Universal Agent” or “Philosopher’s Stone”, and the act of turning paper into dollars is like turning lead into gold. The members of the Federal Reserve Board are in many ways like sorcerers, conjuring wealth seemingly out of thin air and distributing it at will to transform the American economy according to their desires.
The dollar is “fiat currency”, declared into existence by the central bank in a manner similar to the creation of the universe by the divine words “Fiat Lux!” – “Let there be light!” Fiat money (best exemplified by the American dollar) is perhaps the only thing that truly means nothing, and has no independent existence, except in relation to something else (i.e., what it can buy, or be converted into), and yet it is the most powerful force within the human sphere of life – like the “Azoth”, or secret essence of life spoken of in alchemical texts.
In Solomon’s Treasure, I explore the history of the dollar prior to the formation of the Federal Reserve in 1913, and conclude that most of these magical principles were at work in the American economy from the very beginning.
As stated, this system depends entirely on a religious faith by the American people in the supernatural power of the dollar.
The ability of the United States President and other elected officials to uphold and improve the economy depends largely upon their ability to manipulate the spiritual will of the people, in much the same way that a priest or a magician would, inspiring them to have faith in the value of the dollar.
This faith is reinforced by the financial terminology currently in use (“trust”, “fiducial”, “credit”, etc.), as well as by watchwords and symbols found on American money – not only on the bills and coins we currently use, but on those dating back from before the formation of the Republic.
These objects thus act as magical charms, containing a unit of magical charge that is passed on from one person to the next, and multiplied, as the money changes hands. They also act as tokens of communal trust in, and fidelity to, the dollar as an institution. The symbols and key phrases associated with it thus work to enchant the public into a mass hypnotic spell, in which the mind of each individual confirms the consensus belief in the power of a dollar, and its ability to multiply itself as it moves through the system.
Every time a person spends a dollar, or accepts a dollar as payment, they are confirming their belief in the dollar, and using it to exercise their spiritual will.
Now the mysterious markings on the dollar bill can be understood. The words “In God We Trust” are meant to inspire faith in the dollar as a currency, and faith in the American republic. One should trust the dollar the way one trusts in God, for it is implied that God himself has chosen to favor the U.S. and, by extension, the dollar. This is communicated by the message on the reverse of the Great Seal, “Annuit Coeptis” – “He [God] favors our undertaking.”
The words “E Pluribus Unum” and the other twelve examples of “one” on the bill, along with the pyramid, remind us that our society is made up of various parts that are essentially united, and money is the great uniter, since it is the one thing that everyone in the country uses.
The spider web motif in the background of the bill’s design shows that we are all connected through the web of commerce.
The bald eagle on the front of the Great Seal looks a bit peculiar, and Masonic expert Manly P. Hall claims that it is meant to secretly represent the phoenix, the mythical bird who eternally dies and is reborn, and which is a symbol of transformation in alchemy. (Indeed, the original proposals for the design of the Seal did call for a phoenix instead.)
Even the green color of U.S. dollars is symbolic, representing fecundity, plenteousness, and growth.
Former U.S. Treasurer Mary Ellen Withrow explicitly stated in a interview with New Yorker Magazine that this is why the color green is used.
The meaning of the number thirteen is related to alchemy as well.
As I explain in my book, the number 13 symbolized, for one proto-Masonic society, a concept which was itself equivalent to the idea of the Philosopher’s Stone. I am speaking of the Knights Templar, progenitors of modern Freemasons, and inventors of modern banking. Their concept of God, which they called “Baphomet”, was symbolized by the number thirteen, and as I will explain in Part Two, Baphomet was, to them, the key to applied alchemy – both economically and otherwise.
I believe that the Templars passed on the secrets of alchemy to the Freemasons, who utilized them in the creation of the U.S. dollar. Incidentally, the use of the number 13 can be found not just on the one-dollar bill, but throughout the structure of the U.S. monetary system – in the way the Federal Reserve operates, for instance. One of the most striking examples, however, is the fact that there are exactly six types of coins, and seven denominations of paper money, currently in circulation in the U.S.