02 Formation of the Establishment, World War One and Two

The Financial Military Industrial Complex

The constitution gave the power to create real money [coin gold and silver] to the congress, and over the years various banks were established to handle public transactions.  There were numerous local banks throughout the states and wealthy financiers tried to establish a national bank which they could use to control the economy and so control the government.

In the 1830s, U.S. President Andrew Jackson fought to end the Second Bank of the United States. Following the Bank War, the Second Bank lost its charter in 1836.  From 1837 to 1862,  there was no national presence in banking, but many small local banks.  

In 1863, in response to financing pressures of the Civil War, Congress passed the National Banking Act, creating nationally chartered banks.   Wealthy financiers then attempted to bring the nation into heavy debt to finance the war.   The Lincoln Administration sought loans from major banks, mostly in New York City. The banks demanded very high interest rates of 24 to 36 percent. Lincoln refused to borrow on such terms and called for other solutions.  

Greenbacks were paper currency (printed in green on the back) issued by the United States during the American Civil War. They were in two forms: Demand Notes, issued in 1861–1862, and United States Notes issued in 1862–1865.

They were legal tender by law, but were not backed by gold or silver, only the credibility of the U.S. government.  Legal tender means that they are not real money [gold or silver] but could be tendered [offered] in place of real money for payments. 

This step by Lincoln meant that the federal government issued its own printed legal tender notes, instead of the congressional gold and silver money.  The move allowed Lincoln to issue as much legal tender as he wanted without any obligation to borrow from the financiers and their plan to gain control of the government through indebtedness was prevented. 

The financiers then continued to work towards gaining control of the economy through control of the financial system, and seeing its advantages sought to take advantage of the new concept of legal tender. 

These folks used their banking interests to initiate the  Panic of 1873 and the Long DepressionPanic of 1893  and the Panic of 1896.   These were all public bank panics deliberately created by international financier bankers, including the   Panic of 1907.  Then they launched the big  Panic of 1910–1911  just before WW 1. 

After the previous bank panics and in light of the war in Europe, these private financiers managed to push through the Federal Reserve Act in 1913.  This act set up a privately owned national bank and empowered that privately owned bank to issue legal tender [in place of the government doing so] at its own discretion. 

With this Act, an enormous fraudulent system for pillaging the American people on behalf of the Financial Military Industrial complex began. 

The system works like this;  When the government spends more than it receives in taxes, the government issues interest bearing bonds, most of which are then bought up by the privately owned Federal Reserve Bank.  The purchase is effected by the Bank simply printing its own legal tender and placing that legal tender in a government bank account. 

In today’s terms, if the government wants purchasing power they ask the Fed to place a figure in the government bank account, and the Fed does so by simple adding a few more zero’s to the government account, and then charges the government interest on the sum which they had created out of thin air.

From there the financiers objective was to get the government accustomed to wasteful spending so as to get it hopelessly in debt.  They could then control the economy by easing or increasing interest rates; easing rates for a government which supported the policies which they wanted and contracting rates when a government was not malleable to their wishes; and by doing so control governments. 

World War One

WW 1 began when the heir to the Austro Hungarian throne was assassinated by an anarchist [assassin for hire] in Serajevo, Serbia.  Austria Hungary then demanded what amounted to the complete surrender of Serbia in response, which demand Serbia a protectorate of Russia rejected. 

Austria Hungary which was allied with Germany, then attacked Serbia and Russia was obliged to aid Serbia; while Britain and France were obliged by treaty to aide Russia.  

This had all been carefully contrived by international financiers who had lent vast sums to build up the military’s of the major European nations.  These financiers then made huge sums financing the war preparations of all sides, and later after war began from financing the British, French and  United States war efforts. 

When WW 1 began Germany and Austria Hungary were largely defeated in a matter of months and measures had to be taken to prolong the war to extract the most from the participants. 

Two major measures were taken by the internationalists: 

  • The Belgian Relief set up by Herbert Hoover.  The  Herbert Hoover Commission for Relief in Belgium was an international fraud which was paid for by the Allies and underwritten by the U.S.government. It claimed to provide food for the exclusive use of the population of Belgium and Northern France which were occupied by the German army.  However massive ship loads of help were arriving in Belgium and France only to be loaded on trains and sent directly to Germany.     
  • The Russian revolution was arranged taking Russia out of the war and allowing tens of thousands of German troops to be transferred to the Western Front.

Then the US had to be brought into the war to replace the bankrupt Europeans as the new cash cow.

On May 7, 1915,  a German U-boat torpedoed and sank the RMS Lusitania, a British reserve cruiser carrying a load of munitions labelled “wheat” and passengers from America.  The British navy withdrew its screening vessels in an area known to harbor a German submarine on orders from Churchill,  First Lord of the Admiralty, and one torpedo blew the massive ship and its load of  “wheat” sky high. 

After America entered the war massive funds were borrowed from the new Federal Reserve Bank by the US government to fight an unnecessary war that had been unnecessarily prolonged to fatten the coffers of the Financial Military Industrial Complex.

Between the Wars 

The Financial Industrial Military Establishment (FMIE)  had passed the first test of the Federal Reserve Act and as soon as America had recovered from the war it became time for the next step. 

In 1928-29 the Fed raised interest rates, raised them again, and again and again, then all of the major financiers and industrialists dumped their stocks and fled the Market.  The crash of 1929 was deliberately engineered to test the power of the new system and to set the stage for a new era. 

The financiers and industrialists had gotten out before the crash, and later when the Market bottomed out they bought up the nations major industries for pennies on each dollar of real value.  

A new president one of their own elite FDR, took the national reigns and borrowed immensely from them to finance his New Deal; thus putting the federal government deeply in debt and guaranteeing them  a high return on sums created out of nothing.   

World War Two

Not content with that, these folks began preparations for a second round of warfare.  They found a young man distraught by the German loss who had the charisma to lead the German people to another disaster. 

Adolf Hitler had been an unnoticed rabble rouser until his Beer Hall Putsch had brought him to the attention of the industrialists.  His nerve and ability to inspire the people caught their attention and the international elite agreed to finance him and bring his party to power. 

Later, the German economic miracle had far more to do with the backing of international finance  then any plan by Hitler. 

Hitler an extremely well read man, considered the British people to be a tribe of the German nation because of their long mutual history, and wanted to expand east.  Chamberlain understood this and made the Munich Agreement with the idea of letting Hitler and Russia bleed one another before any British intervention. 

The Establishment did not like the plan, wanting maximum profits from an American financed  British war on Germany and Chamberlain was given an extremely bad press.  When Hitler finally moved east as understood by Chamberlain, he was hounded out of office and replaced by the Establishment friendly Churchill.

Even then Hitler did all he could to avoid war with Britain, deliberately holding back his forces and allowing the British to escape at Dunkirk as a goodwill gesture and then offering peace, which offer was rejected by Churchill. 

If Chamberlain’s plan had been followed, Britain would have been spared the blitz and France the occupation, and Britain would have been in position to pick up the pieces once Germany and Russia had exhausted themselves.  Through the course of the war America supplied both Britain and Russia, financed by borrowing from the federal reserve and putting America even further into debt.


In the late 19th century the opening of sugar plantations in the Kingdom of Hawaii led to the immigration of large numbers of Japanese. Hawaii became a possession of the U.S. in 1898, with the Japanese were the largest element of the population, and they have been the largest element ever since.

The US and Japan cooperated with the European powers in suppressing the Boxer Rebellion in China in 1900, but the U.S. demanded that Japan accept the Open Door Policy  which controlled all trade with China by the foreign powers on an equal basis. 

During World War I, both the United States and Japan fought on the Allied side. With the cooperation of its ally the United Kingdom, Japan’s military took control of German bases in China and the Pacific, and in 1919 after the war, with U.S. approval, was given a League of Nations mandate over the German islands north of the equator, with Australia getting the rest.

The United States and Britain demanded a large share in the profitable trade with China and once Britain and America realized the consequence of the League Mandate to Japan  they rejected Japan’s Twenty-One Demands made on China during WW 1 in 1915. These demands required that China acknowledge Japanese League Mandated possession of the former German holdings and economic dominance of Manchuria.

By the 1920s, Japanese intellectuals were underscoring the apparent decline of Europe as a world power, and increasingly saw Japan as the natural leader for all of East Asia.  They identified a long-term threat from the colonial powers, especially Britain, the United States, the Netherlands and France, as deliberately blocking Japan’s aspirations, especially regarding control of China.

The goal became “Asia for the Asians” and Japan took control of Manchuria in 1931 over the strong objections of the League of Nations, Britain and especially the United States. In 1937, it seized control of the main cities on the East Coast of China, over strong American protests. Japanese leaders thought their deeply Asian civilization gave it a natural right to this control and refused to negotiate Western demands that they withdraw from China.  

America opposed Tokyo’s policies over her desire for a part of the huge profits reaped from controlling trade with China and Indochina, and on July 26, 1940 the U.S. government passed the Export Control Act, cutting oil, iron and steel exports to Japan.  

President Roosevelt imposed increasingly stringent economic sanctions intended to deprive Japan of the oil and steel, as well as dollars, it needed to continue its war in China. Japan reacted by forging an alliance with Germany and Italy in 1940, known as the Tripartite Pact, which worsened its relations with the US. In July 1941, the United States, Great Britain, and the Netherlands froze all Japanese assets and cut off oil shipments to Japan. 

In 1941  President Franklin Roosevelt arranged for American pilots and ground crews to set up an aggressive Chinese Air Force nicknamed the Flying Tigers to help defend China against Japan. American air forces to China, with American pilots in Chinese uniforms flying American warplanes, were attacking the Japanese and preparing to bomb Japanese cities well before Pearl Harbor.  In 1941 the United States moved its Pacific Fleet from its traditional home at San Diego, California, to Pearl Harbor, Hawaii, in May 1940, and started to move its newest B-17 heavy bombers to bases in the Philippines, well within range of Japanese cities.   

Japan now in an intolerable position reasoned that the only way out was to seek a source of oil and natural resources in the south Pacific, and launch an attack on the American fleet so devastating that America would back off and seek a peaceful agreement.   

The US knowing the timetable of the attack, evacuated its carriers from Pearl Harbor and allowed her battle ships to be sunk, giving FDR sufficient public support for a declaration of war on Japan. 

In March of 1945 the Japanese offered to surrender if the position of the emperor was maintained.  The US ignored the offer and began to devastate the major Japanese cites with fire bombing techniques learned from the Dresden fire storm.

On March 10, 1945, U.S. B-29 bombers flew over Tokyo in the dead of night, dumping massive payloads of cluster bombs equipped with a then-recent invention: napalm. A fifth of Tokyo was left a vast smoldering expanse of charred bodies and rubble.  Then Kyoto, Kokura, Yokohama, Niigata etc were fire bombed into oblivion. 

FDR, intent of forcing Russia to halt her armies short of overrunning all of Europe; informed Stalin of the atomic bomb at Yalta.  Because Stalin put the claims down to bluster and was not impressed, the decision was taken to drop atomic bombs on Hiroshima and Nagasaki, Japan.   

Russia took notice and Western Europe was spared a Soviet occupation.

This somewhat anti Japanese British film is generally an excellent two hour documentary on China during this period.


After the Japanese Meiji Restoration in 1868, a modern industrial state and a modern military were built for Japan by Britain and the United States over the next decades.  By the turn of the century the Russian Trans Siberian railroad was completed and Czar Nicholas II sought a permanently open port at Port Arthur in Manchuria because the Russian port at Vladivostok was closed by ice much of the year.  

Since Manchuria and Korea had long been in the Japanese sphere of influence, the 1904 – 1905 Russo Japanese War broke out and Russia was defeated by Japan.  

In 1910 Japan annexed Korea and Manchuria and along came WW I, followed by the Bolshevik Revolution in Russia.  

By the mid 1920’s American British and Russian generated resistance to the Japanese in Manchuria grew.

In China proper, Russia backed a Communist Movement led by Mao and the US backed a Nationalist Movement led by Chang Ki-shek against Japan.

Later after the fall of Japan in WW II, these two movements fell to fighting one another.  

These movements in China and Manchuria resulted in a similar situation in Korea with the communists mounting a guerrilla movement to fight Japan backed by Russia under Kim Il-sung, who had received military training in Russia and been sent to organize resistance in Korea as a major in the Soviet army.   Not to be outdone America sent Syngman Rhee to lead a nationalist movement backed by the United States

With the defeat of Japan, Russia and the US agreed to divide Korea at the 38th parallel until the country could be unified.  This move was to separate American and Russian troops while about 700,000 Japanese were being evacuated to Japan, and allow time for an indigenous government to be formed since Korea at that time had no history of independent governance.  

Quickly the two sides began to consolidate their hold on the respective regions with the Russian controlled North putting down all American sponsored nationalists and the US military controlled South making similar efforts against the communists.  

The two sides could not agree on a formula that would produce a unified Korea, and in 1947 U.S. President Harry S. Truman persuaded the United Nations (UN) to assume responsibility for the South, although the U.S. military remained in control of the South as a UN Trust. 

In 1948 with American backing South Korea declared itself independent and in August 1948, Syngman Rhee became the first president of the newly declared Republic of Korea.

Backed by the US, Rhee then burned villages and summarily executed thousands of suspected political opponents and communists without trial. Hundreds more of Rhee’s political opponents were rounded up and sent to prisons across the country following dubious convictions of rebellion.

The fighting expanded into a limited border war between the South’s newly formed Republic of Korea Army (ROKA) and the North Korean border constabulary as well as the North’s Korean People’s Army (KPA). The North launched cross-border guerrilla incursions in order to draw ROKA units away from their campaign against opponents of the Rhee dictatorship in the South.  

Finally on June 25, 1950 North Korea invaded the South in an attempt to unity the country. The war lasted until 1953 killing over one million people and accomplished exactly nothing with a new ceasefire line set at the 38th parallel.

With the Chinese Russian falling out in the 1950’s and 60’s North Korea came into the Chinese fold.  Since then China has moderated its policies while North Korea has ended up a feudal state ruled by a handful of families for personal gain, maintaining the fiction of being a communist state.  

South Korea has prospered as has Japan over the past decades while North Korea like all feudal systems has stagnated and fallen far behind in terms of the public good.  To maintain their position it has been necessary to maintain a “us against the world” belief in the masses whipping up fear of external threats and following that up with militarist bombast.  

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