|name||Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free|
|author||Ellen Hodgson Brown|
|publisher||Third Millennium Press|
Section I: The Yellow Brick Road: From Gold to Federal Reserve Notes
Chapter 1: Lessons from The Wizard Of Oz
In this chapter, Brown illustrates how the fairy tale "The Wonderful Wizard Of Oz" published in 1900 actually derived its imagery from the subject of banking and finance. The characters in the the tale represented groups from real life: The Scarecrow represented the farmers, the Tin Woodman represented the the industrial workers, the Lion represented William Jennings Bryan (the leader of the Populist party) and Dorothy represented the archetypal American girl. The 1890s, the farmers and factory workers were heavily in debt to bankers and tried to push for economic reform by forming various parties that eventually combined to form the Populist party. Populists argued for government issuing money instead of private banks, and proposed several solutions, such as returning to the Greenbacks of Abraham Lincoln, or using the Silverite solution of using silver to supplement the money supply. Bryan won the Democratic nomination but never won the presidency. After World War II, the issue of money disappeared as a political issue.
Chapter 2: Behind the Curtain: The Federal Reserve and the Federal Debt
Brown discusses the Federal Reserve in this chapter. She shows how the Federal Reserve operates in secrecy. It is not actually federal and keeps no reserves, and additionally it is a private corporation, not run by the U.S. government. It doesn't get money from other sources; it simply declares money into existence by writing checks. However it doesn't create most money - that is done by private commercial banks, in the same fashion. It is not deposits that become loans; deposits are actually created through first creating a loan. Goldsmiths in the seventeenth century discovered that they could lend out 10 times as much money as they held in gold, because only 10-20 percent of the gold would be redeemed at a time. This is the basis for fractional-reserve banking. Brown states that fractional-reserve loans are an "impossible contract" to collectively fulfill because in order to feed current loans plus their interest, more loans need to be created or borrowers have to default. Money created through loans now makes up 97.6% of the money supply, so if all debt disappeared, so would most of the money supply, and the economy would collapse.
Chapter 3: Experiments in Utopia: Colonial Paper Money as Legal Tender
In the American colonies, paper money was issued by the provincial governments, some of governments' money later redeemable in silver or gold and others legal tender by declaration. The government-issued money grew along with productivity, instead of productivity being controlled by the gold supply. The paper money allowed the colonies to finance their operations without taxes. Several colonies set up loan offices, which gave the governments income and injected new money into the economy. The colonies that issued too much money created inflation, but those who grew the money with the economy had no inflation. When the money of certain colonies depreciated too much, King George banned the use of paper money, requiring the colonies to borrow from the banks in England. The prosperous colonies sunk into poverty as a result. Benjamin Franklin later stated that the resulting unemployment and dissatisfaction let to the Revolutionary War.