"Banking was conceived in iniquity and was born in sin. The Bankers own the Earth. Take it away from them, but leave them the power to create deposits, and with the flick of a pen they will create enough deposits to buy it back again. However, take it away from them, and all the fortunes like mine will disappear, and they ought to disappear, for this world would be a happier and better world to live in. But if you wish to remain slaves of the Bankers and pay for the cost of your own slavery, let them continue to create deposits."
- Sir Josiah Stamp, President of the Bank of England in the 1920s, the second richest man in Britain at the time
"I hold the hegemony of the world"
- Montagu Norman, Governor of the Bank of England 1920-1944
"I sincerely believe that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale."
- Thomas Jefferson
While Gargantia limited herself because of reasons (don't question the Almighty) Sonic did it because life was more fun that way. He challenged himself to create a God Machine which would give him the power of a God using only his limited power. This machine was to consist of humans, with a couple of rulers are the top who he would control. It was a social machine. The Greatest Machine of them all.
Sonic first focused on building and enlarging the digestive system of his machine - The Economy. The Economy was to be controlled by a few men, all under the control of Sonic.
As Sonic looked down he saw one group holding an immense amount of power: The bankers. He settled down in the early 19th century to learn from one of the best: Mayer Amschel Rothschild. Rothschild, founder of the Rothschild banking dynasty and the founding father of international finance was one of the most influential bankers of all time. He taught him everything he knew.
When talking about the effects bankers have on society it is important to mention the fact that we aren't just talking about jewish bankers. It is true that jews used to dominate the banking scene in the middle ages but this was mainly because they were prohibited from most professions and because Catholics were forbidden from lending money for interest. In the 19th and 20th century, when bankers were at the peak of their power, most of them weren't jews and jews had long since ceased to dominate the market.
The story of the bankers began in the time of commercial capitalism.
Commercial capitalism was not about providing goods for people. Early on capitalists discovered that providing too many goods to people was contrary to their goals of making profit.
The commercial capitalist would make profit by carrying goods from areas where they were cheaper to areas where they were more expensive. Merchants made great profit by buying for a low price and selling for a higher price in areas where the good was more scarce. They soon noticed that this resulted in the good becoming more scarce where they bought it and less scarce in the area they sold it. This would lead to it costing more where they bought it and less where they sold it. The more goods they sold the less profit they would make from each good. The solution was to restrict the flow of goods.
The result was mercantilism: a system where profit was gained not from the trade of goods but from the restrictions on trade of goods.
Many merchants began to shift their interests away from the shipment and exchange of goods, to the shipment and exchange of money. These new bankers would lend money to merchants to finance their activities.
While the merchants wanted low interest rates and high prices so they could make profit the bankers had almost the complete opposite goal. They wanted high interest rates and low prices. The lower the prices were the more goods you could buy for the money. Lower prices thus made money more valuable. It's important to realize that the value of money and the prices of goods are inversely related. If the prices of goods goes up then the value of money goes down and vice versa.
For this reason bankers rejoiced when the supply of goods, demand for money, or the slowness of circulation of money increased. An increase in the demand for goods, supply of money or speed of circulation would bring them to tears. In short, bankers loved deflation while merchants loved inflation of prices. Inflation would encourage production. Deflation would discourage it.
Bankers were obsessed with maintaining or increasing the value of money. If the bankers lent money to someone and he repayed it after inflation had occurred then the repaid money would be worth less than what they originally lent, assuming the interest rate is 0. The bankers prefered monetary deflation because it increased the value of the money they controlled and the interest rates they could charge borrowers.
The bankers tried their hardest to conceal their operations, to make them difficult to understand, make them mysterious. In order to achieve their goals bankers would conceal and mislead both people and governments about their operations. When the bankers grew in power their need for secrecy increased. Everything about them was kept hidden. They offered no shares, no advertising.
The richest bankers started to gain significant power over the political landscape. They started specializing in foreign trade and foreign-exchange. Their political power grew immensely. They became the financiers and financial advisers of governments. Of course their goals weren't to benefit the governments or the people. Their advice given to governments were mostly bad for the people and good for them.
The bankers had two main goals: (1) Forcing the world to bow before the almighty gold - The Gold Standard (2) To take away control of monetary matters from governments and get it into better hands (them).
The system were money is expressed in terms of gold is known as the Gold Standard. The Populist Party correctly noted that the Gold Standard primarily served the interests of the financial elites and opposed it for this reason.
On the 27th of July 1694 one of the most important events in history happened: The founding of the Bank of England. Before 1694 people mostly paid for goods using gold or silver coins. There was one big problem with this approach: gold and silver were really heavy. At the time, thirtytwo hundred dollars in silver coins would have weighed more than the average American. With the Bank of England one could trade a certain amount of gold for a so-called "gold certificate", made out of paper. People could always trade back the certificate but they noticed it was more convenient to store, carry or even trade with them than with actual gold.
Since very few people would ever demand their gold back the banks wouldn't actually need the same amount of gold that people had deposited in it. Most of the gold deposited could be used for other purposes, like for loans. This is called fractional reserve: the bank having less money than people have deposited in it. The banker only needed the amount of actual money which was likely to cashed out. Of course, if everyone wanted to cash out their certificates at the same time then this would cause problems but surely that wouldn't happen, right?
Effectively the bankers would create money out of nothing. It is at this point the libertarians put down their research, too disgusted to continue. According to them this disgusting act clearly put them on the level of the anti-Christ. How could it possibly get any worse? But we will persevere, uncovering the banker conspiracies one step at the time.
Industrial capitalism had made form for a new version of capitalism: Financial capitalism. What characterized this form of capitalism was that the bankers had considerable power. They controlled industry and governments. Their reach was global - money and credit were now handled on an international scale instead of on a local one. This definition of financial capitalism is completely wrong but it holds some truth.
There was one big problem with industrialization (if we ignore the other, more significant ones): it cost money and capital. England and most of northwestern Europe had large savings, Central Europe and America had much less, and eastern and southern Europe had almost none. The international bankers came to the rescue, with a trade offer: They will give us funds if we give them the hegemony of the world. Bankers have less power over those who can finance themselves, and they gained considerable influence over industry in countries like Germany, Italy, the United States, Russia, etc. In countries where industry could finance itself they mostly sought to control foreign policy and the government. Central banking, in countries like France and England, gave the bankers considerable power over the government.
Bankers had significant power over business because they could grant or deny their activities. In exchange for their services, the bankers put their representatives on the seats of the boards of directors of industrial firms. Those firms which did not yield to the bankers' wills did not receive funding and were eliminated. The bankers often tended to have control over multiple competing firms in an industry. With this they had control over entire industries. The international bankers had considerable influence over commercial banks, savings banks, insurance firms, finance companies, partly through the same method, who played along in the bankers' game for world domination. The bankers also bought shares in corporations to increase their power over them. They worked to reduce competition and build monopolies in order to increase their profits. They engineered mergers and consolidations of businesses. By the early 20th century the entire economic system was ruled by around 300 men, who all knew each other, and as we shall see later were all under the control of Sonic.
Governments, like businesses, often have irregular incomes and expenses and need to turn to merchant bankers (or institutions controlled by them) for short term funding. Governments often turned to international bankers, or their representatives, for advice on financial matters. Such representatives were even placed in government positions sometimes. The advice the bankers gave to governments were often disasterous for the governments and the people but were good for the bankers. During the early 20th century the bankers dictated whether or not governments recieved funding, and thus they had the power to approve or reject policies. Big Banking also pressured governments, through manipulation of exchanges, gold flows, discount rates, business activity, etc. to adopt policies which benefitted them but harmed the government and the people.
The power of the international bankers came to be immense. The fear of them even made its way into the stories of great authors. H.P Lovecraft's cosmic horrors, were in fact, allegories for the international bankers. Humans were powerless against these incomprehensibly powerful creatures who threatened to destroy their lives. They faced up against monstrous indescribable banking systems controlled by these abominations, the enemies of mankind. His cosmic horrors reflected the existential dread that ordinary people felt in the presence of the overwhelmingly powerful and inscrutable international bankers. They offer perspective on how it was to live through the economic uncertainty and cosmic terror of a world teetering on the brink of chaos.
It took until around 1850 for the United States to start industrializing. Americans were so inspired by the Industrial Revolution in Britain that only 80 years later they wanted a piece of that pie. The same people who's core part of their ideology was how much they detested the class system in Europe, composed of one class of proprietors and one of labourers, decided to copy it over to America. Abraham Lincoln aknowledged that such a system would be no better than slavery but he insisted another road could be taken. We didn't.
The key international banking families were Raring, Lazard, Erlanger, Warburg, Schroder, Seligman, the Speyers, Mirabaud, Mallet, Fould, Rothschild and Morgan. They dealt not only with industry, but also with governments, and had a profound influence. Sonic reached out to all of these, masquerading as the One and Only God, creator of the Gold Standard, giving instructions and imparting His Divine Wisdom. Sonic's advice to these bankers were partially responsible for the bankocracy which came to plague Europe from the early 20th century.
The bankers would conceal and mislead both governments and the people about the nature of money and their methods of operation. They claimed the Gold Standard existed to stabilize exchanges and prices. Under the Gold Standard the monetary unit was exchangeable for a fixed quantity of Gold. Before 1914 one fine ounce of 12/12 pure gold was worth the same as $20.67 by law. It was the value of gold and the law which decided the value of a one dollar bill. We can thus conclude the Gold Standard did succeed in stabilizing exchanges. However, by limiting the supply of money the Gold Standard would sometimes force prices downward and thus had an unstabilizing effect.
The Gold Standard is deflationary because the natural output of gold has not kept up with the increase in output of goods which forces the prices of goods downwards. The periods of 1818-1850 and 1872-1897 were the longest periods of deflation in history. The inflationary periods of 1790-1817, 1850-1872 and 1897-1921 were made possible because of wars where governments were not on gold or major gold strikes. These wars ended with deflationary crises (1819, 1873, 1921) as the international bankers convinced governments to return to the deflationary money units. Those who defend the Gold Standard for its deflationary quality also somehow miss the fact that finding large new reserves of gold can lead to inflation.
Because of the amazing system they lived in $1,000 in 1790 was worth the same as $1,900 in 1814 (Napoleonic wars), $900 in 1860, $1,800 in 1865 (The Civil War), $900 in 1897, $2,200 in 1920 (World War I), and $1,400 in 1933. If deflation was as high in the war periods as in the deflationary periods then it would be worth between $150 and $60 dollars today. Thank God for wars. Nowadays it would be worth the same as $33,000 but that's a different issue.
The bankers plots were so genius they reminded Gargantia of when cave men discovered fire. Gargantia did not have a favourable view of bankers, or rich people in general. They tended to worship money instead of God. Her view of bankers was even lesser. Charging interest was outlawed by the Bible. The wealthy had an obligation to help those less fortunate, without profiting from their "generosity". Remember when greed was a sin?
Jesus Christ described the system for the supply of money using a metaphor of a inverted pyramid. At the lowest level was a supply of gold and gold certificates: on the intermediate levels there was a much larger supply of notes; At the highest there was an even greater supply of deposits. The lower levels had smaller quantities of money which supposedly made them sounder. A libertarian would claim the lower levels were "real" money while the upper ones were "fake" money. Jesus says "A holder of claims on the middle or upper level could increase his confidence in his claims on wealth by reducing them to a lower level, although, of course, if everyone, or any considerable number of persons, tried to do this at the same time the volume of reserves would be totally inadequate". Bank notes were previously issued by multiple different banks, but as central banking became more common central banks took over this function. Central banks were private institutions owned by shareholders who profited from their operations, Jesus documented all this in his book "Four-and-a-half-years of Struggle Against Lies, Stupidity and Cowardice", about his struggles against Sonic in heaven, intended to be the first book of the third testament of Jesus Christ. This book was distributed in heaven in the period of 1922-1925 but was doomed to obscurity following Jesus' banishment from heaven by Sonic The Hedgehog in 1934. This book, and the third testament which was completed by him in 1942, have been distributed among private groups and are only known about by a special few.
The central banks co-operated with the private banks in their goals. Many directors and members of central banks around the world had strong associations with private banks. The central banks fought for the interests of the private bankers, and adopted their philosophy.
We differentiate between two types of deposits: (1) Lodged deposits, which were real deposits made by actual people; (2) Created deposits, which were claims on money created by the bank out of nothing as loans to "depositors" who had to pay interest on them, creating a debt from them to the bank. Both of these were merely claims on money which neither the bank nor the depositor had. Still, they were money which could be traded with and should be considered part of the money supply. Created deposits are by their nature inflationary since they increase the money supply. The amount of deposits banks were allowed to create was often regulated by based government. In the United States deposits were limited to ten times the reserves of notes and gold while in Britain it was around twenty times such reserves.
The bankers did not just shoot the entirety of civilization in the foot but they also shot themselves. They loved deflation but their eagerness to lend money at interest often lead to inflation. The bankers could however also use this for their advantage. By increasing the money supply with loans, they increased the indebtedness of others. Then by decreasing the money supply they could force multiple debtors into bankruptcy and confiscate whatever collateral was pledged. This technique was used to crush competitors and destroy businesses and industry the bankers didn't approve of.
Sonic granted the bankers the power of interdimensional travel. The bankers would meet in their dreams in a secret chamber, wearing ceremonial robs with dollar signs. They dreamt about a secret location beneath Wall Street where an interdimensional portal was housed. The portal would flicker to life, and the bankers would enter into otherworldly realms. They would meet with extraterrestial demons who offered them financial advice and predictions about the stock market. This place was known as the sixth dimension. The name was inspired by the devil's number 666. When speaking with bankers himself Sonic would mostly use the fourth dimension. Sonic called this dimension the "Sonicron" while Gargantia sometimes referred to it as the "Gargantiaverse". It's a dimension where logic and chaos dance hand in hand, and the only boundaries are Sonic and Gargantia. It is truly a holy realm.
The demons proposed a daring mission for the bankers: to travel to the forbidden seventh dimension, a realm untouched by any being from Sonic and Gargantia's worlds. Legend has it this dimension contained the Akashic records: records containing all the universe's knowledge. It was a place where every event, every thought, and every possibility was recorded. The bankers, driven by their boundless curiosity and greed, accepted the demons' mission to travel to this forbidden realm. Some of the bankers of course rejected this mission, arguing they would not go unless Sonic approved of it, but others agreed, the foremost of them being the Rothschilds and J.P. Morgan.
Through manipulation of their interdimensional portal they managed to configure it to lead to the seventh dimension. What they saw there was different from anything they had ever seen before. Landscapes, shifting and blurring with time. Beings, of pure energy floating in the air. Dragons, entities, guardians. Lands in the sky. Sky in the lands.
They heard whispers of a time gone by. Of all the people who had lived on this planet blasting through space around a fiery ball. Myths, prophecies and ancient secrets into their minds.
As they floated in the air, flying through the wind and sky, they used their immense intelligence to navigate the seventh dimension. As they reached the core a great library appeared before them. Full with books, spanning infinitely in all directions, it contained all the collective wisdom of the universe. They could simply touch a book and all its knowledge would be absorbed by them. They harnessed knowledge greater than anyone had held before.
With their newfound wisdom the bankers returned to Earth, and they were able to dominate the financial system. They had learned to predict stock market movements and make strategic investments better than anyone. It didn't take long for Sonic to notice these bankers had gained access to the Akashic records and he was not pleased about it. Before he had given them plenty of freedom but now he placed them under stricter control. They were placed under constant surveillance and all their major actions had to be approved by Sonic.
Sonic closed off their access to the seventh dimension and from then on the bankers were only allowed in our normal dimensions as well as the fourth, fifth and sixth dimensions. The fifth dimension is the dimension where one can speak to the spirits of the dead. From 8,896-3,329 BC this dimension was open to us which allowed dead spirits to speak with us. In this era the spirits of the dead ruled over the world until the dimension was closed off again in 3,329 BC.
Central banks have techniques for influencing the credit policies of other banks. They can change the interest rate they charge lesser banks for loans in order to influence the interest rates of the lesser banks. Sometimes the greedy lesser banks will choose not to lower their interest rates when the central bank does. In this case the central bank turns to harassment of the lesser bank in order to force it into submission. The central bank can also force local banks to decrease credit. It has the power to restrict inflation but not to restrict deflation, curious? Where could this idea have come from?
Goverments have power over money. Their powers include control over a central bank, control over public taxation, and control over public spending. One thing to note is that most central banks have been private institutions, although goverments still have some control over them. Taxation is often deflationary while goverment spending tends to be inflationary. Whether the goverments policies will cause inflation or deflation will depend on how these are balanced. An unbalanced budget will be inflationary, while a budget with a surplus will be deflationary. Goverment can also change the amount of gold the monetary unit is worth to reduce the value of money. Under the Gold Standard the goverment has the power to change the value of the monetary unit at will by adjusting its exchange rate in terms of gold. The gobermint can also choose to go off the gold standard completely to be able to print an infinite amount of money because they are no longer limited by their gold reserves.
Now that everyone is distracted by my use of the term "gobermint" they aren't going to notice the change of topic. Financial capitalism was about more than just banks and bankers. The international finance practices of the early 20th century were very interesting. When goods are exchanged between countries they mostly aren't paid for by national notes, certificates or checks since those aren't used outside the countries they were issued in. Since directly shipping gold is also inconvenient, bills of exchange are used. When an exporter wants to sell goods to a foreign country they create a so-called bill of exchange. This is a legal agreement that the importer will pay a specific amount of money to the exporter at a future date. The exporter can then sell the bill for their own currency to someone else who accepts the importer's currency. These sales are often done at the foreign-exchange market. Using this method, the exporter receives payment with their own currency and the importer can pay with theirs.
The amount of money which would be paid for these bills of exchange depended on supply and demand. The value of other currencies in relation to the country's currency thus depended on the market forces. These values would fluctuate widely for countries which weren't on the gold standard, but only narrowly for those on it. Importing more than you export often leads to a devaluation of your country's currency while exporting more than you import has the opposite effect. If the imports of a country exceed the exports, there will be an increased demand for the foreign country's currency in the foreign-exchange market. As well, there is an increased supply of the domestic currency. Because of this the price of the foreign bills would rise while the value of the domestic currency would fall. The domestic currency would thus be devalued in comparison to the foreign currency. This would lead to exporting of goods becoming more profitable as exporters could sell their bills of exchanges for a higher price. One thing to keep in mind is that under the Gold Standard a certain currency might be devalued, but it will still be worth the same amount of gold. Basically it will be devalued but still have the same value. This means that if prices increase it will lead to more profit, as its exchangeable for more gold, even though the currency is considered less valuable. To sum up, if you import more than you export it will lead to exporting becoming more profitable. In the same way if you export more than you import it will lead to importing becoming more profitable.
In its astounding beauty early 20th century international trade would basically regulate itself. Exports and imports would fluctuate between disequilibrium and equilibrium, with wider fluctuations when one is not on the Gold Standard. On the Gold Standard the value of a country's money will never go below the cost of shipping gold between the two countries because if a bill of exchange cost more than that it would be preferable to just ship the gold directly. Fluctuations are thus smaller on the Gold Standard.
If a country exports more than it imports then more gold will flow into the country than out which will lead to inflation. If it imports more than it exports then it will lead to deflation. The Gold Standard lead to a subordination of the stability of prices to the stability of exchanges. Eventually (1929-1936) governments turned to subordinating the stability of exchanges to the stability of prices. They wanted to control inflation and deflation, not having it under the influence of the exchange rates or the Gold Standard. They eliminated the Gold Standard and turned to fiat.
World War I and its consequences proved to be a disaster for the Gold Standard. It was left to die under conditions which were no longer favourable to it. I wish I could say that no one misses it, but unfortunately there are some who do.
In the world before 1914 Britain was the dominant force. They had the greatest financial and naval forces in the world. British supremacy dates back to the sixteenth century. In the sixteenth century they were the rulers of the Atlantic. By the nineteenth century they were the rulers of the seas. By 1900 they owned 39 percent of the world's ships. But their dominance did not end there, for with the industrial revolution they became the wealthiest nation on Earth. It took many years for it to spread to the rest of the world, 80 for America, 100 for Japan, 220 for China. Britain was the center of world trade. They were the biggest player in world affairs. Many countries looked at them for guidance, and copied many of their systems over to their own country. They were concerned with what worked, and what gave them power. The world is dominated by power struggles, since the begining.
Do not take this to mean Britain was great. Orestes Brownson once said "Nowhere did I find the extremes of wealth and poverty so striking as in Great Britan... ...I could not but think by what a terrible tax on the laboring classes their enormous wealth must have been accumulated. Their wealth has been gained at the expense not only of the laboring class of their own country, but at the expense of the laboring classes of British India and of all nations against which Great Britain holds the balance of trade. It has been gained by coining the toil, the sweat, the tears, and the blood of millions; and what can I say in defense of the system that permits, encourages, nay, demands for its success, such gross outrages upon our fellow-men?".
Further he argued "No nation is really enriched by trade. Trade accumulates luxuries, but luxuries impoverish, not enrich a people. All real wealth is in land and labor, and that nation is richest in which labor can the easiest obtain from the land the means of subsistence and comfort. The land is with us vastly more burdened than it was fifty years ago, and hence it is far harder for the laborer to maintain his independence"
"We know that we do not follow Adam Smith or any of the political economists, though it is possible that we have studied him and them as much as most men have. They are right enough from their point of view and in their narrow sphere, but the system they defend, when carried into practice and made the view of national policy, is about as absurd and mischievous a system as the devil ever assisted the human mind to invent"
Brownson even argued that a war against Britain that brought down their economic system would be advantagous for the world. Maybe instead of fighting a Civil War against our own men we should have united to bring down Great Britain and their satanic economic system.
So was the world of early international financial capitalism. It was truly a time of times, a world of worlds. It gave people a bit of freedom, but the Sonician bankers abused it to gain immense power. It was a time with little restrictions or government interference. Like all things, it did not last, for what goes up must come down, and what rises must fall.