Witch Hunts and The Federal Reserve

So, what do the Salem Witch Hunts and the Creation of the Federal Reserve have in common and what haven’t we learnt since the inception of the Western World?

Thomas Sowell is a 93-year-old historian and economist, applying psychological observations and behavioural analysis identifying societal trends and movements that he argues are eroding society. The power and growth of the government and individuals is driven by personal benefit, idealism, and support of the media to drive an outcome that benefits those individuals to the detriment of society. Six years ago, he spoke about the coming inflation due to the failure of the Federal Reserve, which ultimately was created to benefit J. P. Morgan and other bankers who were facing a crisis in 1907.

Political power, financial benefit for a few, is disguised as a ‘common good’ for the many. It is often done with the assistance of the media (or town gossips) using manipulated statistics and fear tactics to emphasise the result. The result is the benefit of the few and the continued deterioration of society for the many. Over time the few become more powerful and more vocal, one example of this is the concentration of media ownership by billionaires today, allowing manipulation and ‘choice’ of information to champion their own causes, enlisting politicians, who also benefit through increased power and or financially, to push their cause. Some of the changes in society can take decades or centuries to truly show the detriment for society, but the common thread is someone was advantaged at the start and continues to be advantaged in the future – while society pays the price.

The Salem Witch Hunts

The Salem Witch Hunts seem like a relevant comparison to the current world situation, as war and migration appear to have been a driving force in the trials. The term ‘political witch hunt’ references this historical event. From that term we can understand there was a ‘political advantage’ that was obtained, but delving deeper into the story you can find who the ultimate beneficiary was, and it was financial.

The Salem Witch Trials occurred in 1692 and 1693 during a period of war which caused refugees to migrate on mass to the Essex County. This migration caused a strain on resources within the community, creating the opportunity to incite beliefs. At the time there was a political dispute occulting in Salem, where large landowners, the Putnam’s wanted to form a separate municipality, establishing their own congregation, paying a retired minster handsomely. Those that did not support the new municipality refused to pay their taxes, leading to Samuel Parris, the alternate minister to accuse some women of witchcraft. Most of those accused had not paid their tax.

The trials seem to start when four ‘afflicted’ young girls (one of them Ann Putnam Jr) accused three women of witchcraft, leading to mass hysteria and the establishment of the Court of Oyer and Terminal by John Hathorne, allowing ‘spectral evidence’. The trials became political in nature, allowing individuals to get at economic and political rivals.

19 people were executed as a result of the trials, with legislature introduced in 1945, 1957, and 2001 clearing all the victims as a recognition of the ‘damage’ the witch hunt did to society.

Sowell on Creation of The Federal Reserve

To quote Sowell on the Federal Reserve

“For most of the history of this country (USA) there was no Federal Reserve system, which was established in 1914 to protect bank failure. But bank failures in the 1930s exceeded anything ever seen before the establishment of the Fed”

The Federal Reserve inception began in 1907 with J. P. Morgan and other bankers, who due to ‘run on the banks’ faced financial ruin. J. P. Morgan called a meeting at his library in Madison Avenue, by the next morning a plan to contribute US$25million to backstop the U.S. banking system was established.

After the bank run, politicians in Washington began wondering if this would happen again and what should America do to ensure they weren’t relying on bankers in New York to save the U.S. financial system. Led by Senator Nelson Aldrich, he ‘picked up the problem’ and was determined to find a solution – but not on his own – with the help of the 1907 Banking saviours.

Aldrich devised a plan to get all the bankers, one by one, concealing their identities as ‘duck hunters’, by a private rail car in New Jersey. There they got off in Georgia, headed to Jekyll Island for a one-week junket at a private club, with their vision establishing the Federal Reserve.

Sowell identifies this Federal Reserve as:

 ‘The Fed represented wonderful hope, but we’ve had so many programs that represented hope that ended in disaster.’

The Federal Reserve from there can be seen as a political system/establishment that has created more harm than good, its establishment was to prevent bank failures, but also changes in money supply. During the 1930s and 1940s under the Federal Reserve, the world saw the greatest deflation in history. Similarly, their interference, which Sowell identified as the Fed buying of bonds, has now led to enormous inflation. Hardly a success for the U.S. – but J. P. Morgan (and his descendants) appear to be doing just fine…

We remind you that this ultimately contributes heavily to the solid black line of global liquidity in the chart below and how gold and Bitcoin, as two monetary assets sitting outside this ‘system’ protect you beautifully. For most, unfortunately, their lives are governed by that dotted line down the bottom… CPI. ‘Main street’ inflation to which wages etc are even struggling to meet. Gold, silver, and Bitcoin are your ticket to join the ‘good folks’ of Jekyll Island.