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WEB OF DEBT
The Shocking Truth
About Our Money System
and How We Can Break Free


Third Edition
Revised and Expanded



ELLEN HODGSON BROWN, J.D.



Third Millennium Press
Baton Rouge, Louisiana
Copyright © 2007, 2008
Ellen Hodgson Brown

All rights reserved. No part of this book may be reproduced or transmitted
in any form or by means, electronic, mechanical, photocopying, recording, or
otherwise without the prior written permission of the publisher.

First edition July 2007
ISBN 978-0-9795608-0-4
Second edition revised and updated February 2008
ISBN 978-0-9795608-1-1
Third edition revised and expanded March 2008
ISBN 978-0-9795608-2-8

Cover art by David Dees


Library of Congress Control Number 2008900963
Includes bibliographic references, glossary and index.
Subject headings:
Banks and banking “ United States.
Debt “ United States.
Developing countries “ Economic policy.
Federal Reserve banks “ History.
Financial crises ” United States.
Imperialism “ History “ 20th century.
Greenbacks ” History.
Monetary policy.
Money “ History.
United States ” Economic policy.




Published by Third Millennium Press
Baton Rouge, Louisiana
www.webofdebt.com
800-891-0390
Printed in Malaysia

ISBN 978-0-9795608-2-8

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CONTENTS



Acknowledgments ............................................................................... ix
FOREWORD by Reed Simpson, Banker and Developer .............. xi
INTRODUCTION: Captured by the Debt Spider ....................... 1

Section I THE YELLOW BRICK ROAD:
FROM GOLD TO FEDERAL RESERVE NOTES ....... 9
Chapter
1 Lessons from The Wizard of Oz...................................... 11
2 Behind the Curtain: The Federal Reserve
and the Federal Debt ............................................................. 23
3 Experiments in Utopia: Colonial Paper Money
as Legal Tender ...................................................................... 35
4 How the Government Was Persuaded to Borrow
Its Own Money ...................................................................... 47
5 From Matriarchies of Abundance to
Patriarchies of Debt ............................................................... 57
6 Pulling the Strings of the King:
The Moneylenders Take England ....................................... 65
7 While Congress Dozes in the Poppy Fields:
Jefferson and Jackson Sound the Alarm .......................... 75
8 Scarecrow with a Brain:
Lincoln Foils the Bankers ..................................................... 83
9 Lincoln Loses the Battle with the Masters
of European Finance ............................................................. 91
10 The Great Humbug: The Gold Standard
and the Straw Man of Inflation .......................................... 97




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Section II THE BANKERS CAPTURE
THE MONEY MACHINE ........................................ 105
11 No Place Like Home:
Fighting for the Family Farm ........................................ 107
12 Talking Heads and Invisible Hands:
The Secret Government ..................................................... 115
13 Witches™ Coven: The Jekyll Island Affair
and the Federal Reserve Act of 1913 .............................. 123
14 Harnessing the Lion: The Federal Income Tax ............. 133
15 Reaping the Whirlwind: The Great Depression ........... 141
16 Oiling the Rusted Joints of the Economy:
Roosevelt, Keynes and the New Deal ............................. 151
17 Wright Patman Exposes the Money Machine .............. 161
18 A Look Inside the Fed™s Playbook:
“Modern Money Mechanics” ........................................... 171
19 Bear Raids and Short Sales:
Devouring Capital Markets .............................................. 181
20 Hedge Funds and Derivatives:
A Horse of a Different Color ............................................ 191


Section III ENSLAVED BY DEBT:
THE BANKERS™ NET
SPREADS OVER THE GLOBE ................................. 201

21 Goodbye Yellow Brick Road:
From Gold Reserves to Petrodollars ................................ 203
22 The Tequila Trap: The Real Story
Behind the Illegal Alien Invasion ..................................... 215
23 Freeing the Yellow Winkies:
The Greenback System Flourishes Abroad .................... 223
24 Sneering at Doom:
Germany Finances a War Without Money .................... 233



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25 Another Look at the Inflation Humbug:
Some “Textbook” Hyperinflations Revisited ................. 239
26 Poppy Fields, Opium Wars and Asian Tigers ............... 249
27 Waking the Sleeping Giant:
Lincoln™s Greenback System Comes to China .............. 257
28 Recovering the Jewel of the British Empire:
A People™s Movement Takes Back India ........................ 265


Section IV THE DEBT SPIDER CAPTURES AMERICA ....... 275

29 Breaking the Back of the Tin Man:
Debt Serfdom for American Workers ............................. 277
30 The Lure in the Consumer Debt Trap:
The Illusion of Home Ownership .................................... 285
31 The Perfect Financial Storm ......................................... 293
32 In the Eye of the Cyclone: How the Derivatives
Crisis Has Gridlocked the Banking System ................... 301
33 Maintaining the Illusion:
Rigging Financial Markets ................................................ 313
34 Meltdown: The Secret Bankruptcy of the Banks .......... 325


Section V THE MAGIC SLIPPERS:
TAKING BACK THE MONEY POWER.............. 335

35 Stepping from Scarcity
into Technicolor Abundance ............................................ 337
36 The Community Currency Movement:
Sidestepping the Debt Web
with “Parallel” Currencies ............................................... 347
37 The Money Question:
Goldbugs and Greenbackers Debate ............................... 357
38 The Federal Debt:
A Case of Disorganized Thinking ................................... 367


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39 Liquidating the Federal Debt
Without Causing Inflation ................................................ 375
40 “Helicopter” Money:
The Fed™s New Hot Air Balloon ....................................... 383


Section VI VANQUISHING THE DEBT SPIDER:
A BANKING SYSTEM
THAT SERVES THE PEOPLE .............................. 391

41 Restoring National Sovereignty
with a Truly National Banking System .......................... 393
42 The Question of Interest: Ben Franklin Solves
the Impossible Contract Problem ..................................... 407
43 Bailout, Buyout, or Corporate Takeover?
Beating the Robber Barons at Their Own Game .......... 417
44 The Quick Fix: Government That Pays for Itself .......... 425
45 Government with Heart:
Solving the Problem of Third World Debt ..................... 435
46 Building a Bridge:
Toward a New Bretton Woods ........................................ 441
47 Over the Rainbow:
Government Without Taxes or Debt ............................... 451

Afterword THE COLLAPSE OF A 300 YEAR
PONZI SCHEME .................................................... 463
Postscript: February 2008 - THE BUBBLE BURSTS ............ 465
Glossary ......................................................................................... 479
Selected Bibliography of Books and Suggested Reading .......... 487
Notes ......................................................................................... 489
Index ......................................................................................... 521




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TABLE OF CHARTS

Compound interest at 6% over 50 years ............................... 32
Inflation from 1950 to 2007..................................................... 103
Income of top 1% versus bottom 80% .................................... 279
Household debt, 1957 to 2006 ................................................ 286
M3 money stock, 1909 to 2006 ............................................... 307
Price of gold, 1975 to 2007 ..................................................... 346
Federal government debt, 1950 to 2015 ................................ 368
Federal government debt per person, 1929 to 2007.............. 369
Stock market (S & P 500), 1960 to 2006 ................................. 381




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AUTHOR™S NOTE
TO THIRD REVISED EDITION

Somebody once said works of art are never finished, just
relinquished to the world. This research is a work in progress, begun
when I was a law student in the 1970s but was limited to the material
available in the library and in journals. With the explosion of
information in the Internet Age, the missing pieces have fallen into
place; but while I have been more than five years assembling them, I
have still found errors, quotes that turned out to be apocryphal, and
things needing to be updated. I have heavily footnoted my sources
and quoted extensively, in hopes of aiding the next generation of
researchers who might be inspired to carry on the pursuit.
In the half year since this book was first published in July 2007,
the banking system has been fracturing rapidly, warranting this 2008
revision and postscript. While I was at it, I refined the prose, eliminated
errors, and revised and expanded the solutions section concluding
the book. For future updates, see webofdebt.com/articles.

Ellen Brown, February 2008




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To my grandmother Ella Mae Hodgson,
who died in difficult circumstances
during the Great Depression;
and to my parents Al and Genny Hodgson,
who lived through it.

_________________________________________________________


ACKNOWLEDGMENTS

This book has been heavily shaped by the feedback of many astute
friends, who have puzzled over the concepts and helped me to make
them easy to understand; and of a number of experts who have helped
me to understand them myself. Georgia Wooldridge advised on
structural design with an architect™s eye. Bob Silverstein looked at the
material with a sharp agent™s eye. Gene Harter and Lance Haddix
reviewed it from a banker™s perspective. My children Jeff and Jamie
Brown challenged it as graduate students in economics. Paul Hodgson
gave the libertarian perspective. Lawrence Bologna and Don Bruce
did detailed editings. Duane Thorin brought a fresh critical approach

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