 Now, they can go buy their ships, pay their army, and have whatever war they need to have. And the central bank is happy because the most powerful banks in the world, the most connected, at that point in England, now we're sure that nobody is going to destabilize their system of fractional reserve banking, where they loan out most of their money and make an interest on it. And at this point, people pretty much had to store their gold with these banks as part of the cartel because they were printing the currency that was used to buy anything in the whole country. So this is the system that we have now. This is a system that's spread from England. And you can see why any kind of a state would really favor a system like this because whatever financing needs to be, whatever financing a government will need, the central bankers are ready to provide it any time. And of course, the state always needs money because the state has no money of their own. How can they make money? They can either tax their citizens, in which case the citizens revolt if the tax is too high, or they can just talk to the central bank and the central bank will buy their bonds or print money. They're not buying these bonds with real money because they don't have any real money. They didn't make any real money. There's no profit there, but they can create it because it's the law. They're the only ones that are allowed to create currency. So how did we get from where we were from that system where we are right now in the US? And the gold standard is pretty much written into the Constitution. Not pretty much. It is written into the Constitution. And this was a big problem for the government in the US for a long time. It kept the government very weak because they had to finance all their expenditures with real money, with gold. Or they had to tax the citizens. And the citizens don't want to get taxed. Americans are very individualist. They like to think for themselves, relatively speaking to other countries. They were very rebellious people because they came from Europe and they were afraid of any kind of authority over them. So there was a few central banks instituted in the United States history, but their charters eventually expired because they were very short term. And the United States, its biggest period of prosperity really became a world power was after the Civil War when the United States was on a gold standard the whole time and it was a constant period of deflation, where there was a gold standard, there was no central bank, and money constantly became more valuable. So if you just hold your gold, you could buy more and more with it over time. Because there was more goods being produced constantly, production was increasing, technology was getting better and better, more goods were being produced for the same amount of money. And what started happening around the early 1900s was very powerful interest like the Rockefellers banking family and oil family and the J.P. Morgan's inherently understood again the problem that has existed with banking for centuries and they also needed a way to get rid of this problem. How do we get security in the banking system? So there's no runs on banks, so we can take out more loans, we can leverage more and we can control the interest rate, so it's not as competitive. So everybody can loan out at 5% let's say and make 5% on this money that they don't really have. And also at the same time corporations, of course standard oil, the Rockefeller interests and other very big very well connected, corporations always want an easy way to get loans. So they started lobbying the government to institute a central banking system. And you may have heard this meeting in Jackal Island where all the press was paid off not to write about it because people understood the problems and they really wanted to know about any kind of central banking, cartilizing going on, cartilization going on. So a lot of press was paid off to not talk about this meeting in Jackal Island, Georgia where these interests, the Warburgs from Europe, which were connected to the banking interests in Europe, J.P. Morgan interests and the Rockefeller interests and a few others got together and wrote the Federal Reserve Act together. And they got Woodrow Wilson to institute and write this into U.S. law or legalize it. And the way they sold it to the people is there was regional central banks so to speak. There's a Federal Reserve in New York, there's Kansas City, there's of course a few western ones, there's a southeastern one. And the guys is it's a democratic system. There's not one central banker deciding everything. So what happened was there was some backlash but when Congress was out of session they instituted this Federal Reserve Act. And of course what happened soon after was World War I. Something else was also written into law at the same time that the Federal Reserve Act was written into law. That's also the income tax. They could see that World War I was going to take place. They also understood that they're now going to print a lot of money. And they needed a source of revenue to pay back the loans that they were going to take out from the Federal Reserve. So they knew that they needed an income tax. They needed another source of revenue from the people. And it really started off at a very minimal amount. So then after World War I we had the Roaring 20s, if we're not sure, heard. It's a period of great prosperity in the United States. Well why did that happen? And you'll always hear blame on capitalism and greed and these financial interests, these brokers that are hyping up stocks. What happened was the Federal Reserve had very low interest rates which encouraged lending. So they lowered interest rates so they could lend more money out. And this encouraged a lot of people to take out loans and it added a lot of liquidity to the system. So when you have a lot of liquidity it inflates the money supply. You have an issue where prices of everything go up, including stocks. So of course eventually that system becomes unsustainable and there's a crash. And that's what happened in 1929. When this crash took place you'll hear a lot about Hoover being a very non-interventionist president. Actually he was the most interventionist president up until that time. And FDR came in saying that he's not going to be an interventionist president. He's not going to try to stimulate the economy because Americans were very much against that. They understood that it really doesn't work. But what ended up happening is FDR, Franklin Delano Roosevelt, which is really by Americans is almost deotized. He's almost a deity. He's almost a god at this point. In my opinion he is absolute worst president of the 20th century. Probably him, Woodrow Wilson, Hoover, a few others. They're all pretty much bad but there's a few that are decent. Halfway. Harding I would say is probably the best president of the 20th century. And why would I say that is because Harding was president right after World War I. And there was a threat of a big recession. And actually there was a big depression, not even a recession. GDP dropped by something like 30%. If we had something like that happen at this point then I don't know what would happen. Everybody would just go crazy probably because they're afraid of these kind of numbers. But Harding said, listen, I'm the president. I'm not a business person. I'm not going to tell business people how to run their business. I'm not going to print any money. I'm just going to sit here and play some cards. He was famous for having these poker games at the White House. And that's pretty much all he did. And the economy recovered from this crazy depression in about six months. Why? Because entrepreneurs are smart and there was no meddling with the economy by bureaucrats who think they know what they're doing. And that's why you never hear about the great depression of 1920 because Harding knew and understood what was really key to a prosperous economy. And also the Federal Reserve was very young at that point. So at this point they didn't have the power and didn't really have the bravery to go out there and stimulate like they do now. So in the 30s you have FDR. Now also at the same time there's this progressive movement. There's more socialization going on. Of course you had the revolution where the communists came into power in the Soviet Union. And there was a lot of more socialist leading governments and progressive leading governments all over Europe at the same time. So this type of a pressure created the type of presidents we had in the late 20s, early 30s. So Franklin Delano Roosevelt, even though he said he's not going to intervene in the economy, what does he do a few years after he comes into office? He declares a bank holiday so there's no run on banks. And he also under threat of jail time, prison time, 10 years, he makes everybody take all their gold and bring it in and to the government and just get currency in return. So he takes the people off the gold standard. So this is the point where the real money is taken away from the people and in return they're just given a paper currency. So you see what's going on there. He's finding a way to have complete control over the money supply and be able to print as much money as they want without it actually being backed by gold. Now so at this point the central banking system was still on a gold standard. So countries and central banks in different countries could exchange with each other on gold but no longer was the US citizen on a gold standard. It was illegal. So then we get to about 1944 close to the end of World War I. World War II, sorry. And what we have is the Bretton Woods. Bretton Woods was an agreement because the United States was really the only big industrial power left standing that the whole world was now going to be on a US dollar standard. So the whole world would view as the dollar as their reserve currency. And that's because the US government, Fort Knox and all that, really still had more gold than any other central bank in any other country. But it was just held away from the people and it was held in certain areas, the Federal Reserve of New York and Fort Knox and a few others. So other central banks agreed to the system. Now there was a lot of Austrian economists and Austrian is a certain school of economics that is becoming popular because they really understand what's going on and they predicted all these crises. They predicted that Bretton Woods would fail. But it went through anyway. Why? Because all the elites, all the elite institutions, all the elite corporate interests and banking interests, they're all on the same side. And of course most politicians are as well because they're financed by these interests. So Bretton Woods was enacted and the reason it worked is because the United States promised that any central bank, if they use the dollar as their reserve, could always come back to the United States Federal Reserve and redeem their dollars, their paper dollars for real gold.