The Panic of 1907, also known as the Knickerbocker Crisis, saw the New York Stock Exchange lose 50% in a week, triggering bank runs across the nation. At the heart of the crisis were bankers running 'bucket shops' with depositors' money, holding only fractional reserves. J.P. Morgan and his Wall Street cronies stepped in to 'save' the system, but they were also the ones who caused the panic. This manufactured fear paved the way for the creation of the Federal Reserve System in 1913.
The Money Trust and the Birth of the Fed
Signed into law by President Woodrow Wilson on December 23, 1913, the Federal Reserve Act was pushed by a secret cartel known as the 'Money Trust,' comprising J.P. Morgan, John D. Rockefeller, Jacob Schiff, Paul Warburg, and Baron Rothschild. The subsequent Pujo Committee investigations uncovered a web of 341 directorships and 112 corporate entities controlled by Morgan's group. These same families who destroyed the economy in 1907 went on to crash it again in the 1920s and 1930s, while maintaining tight control over U.S. monetary policy.
War, Gold Confiscation, and the Petrodollar
In 1933, Franklin D. Roosevelt, with Morgan's backing, declared a bank holiday and confiscated all privately held gold, making it illegal to own. During World War II, the same banking families funded all three factions: the Allies, the Soviet Union, and Nazi Germany. The 1944 Bretton Woods system pegged the dollar to gold, but the Fed's endless printing led to its collapse. In 1971, President Nixon severed the gold link, and a secret deal with Saudi Arabia created the petrodollar system, forcing the world to buy oil in U.S. dollars.
The Fed's unaudited balance sheet has funded endless wars under presidents from Reagan to Trump. It orchestrated the 1987 Black Monday crash and the 2008 subprime crisis, which led to massive bailouts and quantitative easing. Satoshi Nakamoto embedded a headline about bank bailouts in Bitcoin's genesis block, signaling the birth of a decentralized alternative.
COVID-19 and Infinite QE: The Bitcoin Counter-Economy
The 2020 pandemic triggered the Fed's most aggressive expansion yet: $6.9 trillion in balance sheet growth, zero interest rates, and unlimited bond buying. Wikipedia updated the Fed's page to note that “the COVID-19 pandemic in 2020 [has] led to the expansion of the roles and responsibilities of the Federal Reserve System.” Just like the five unelected men who controlled the early 1900s economy, five Fed board members today create trillions at the push of a button.
Many economists warn of hyperinflation akin to Venezuela or Zimbabwe. Libertarians, gold bugs, and bitcoiners see the Fed as a Ponzi scheme that has enriched Wall Street elites for over a century. As the dollar's dominance wanes, cryptocurrencies like Bitcoin offer an escape route—a counter-economy built on sound money. Whether the Fed's unlimited printing will ultimately destroy the dollar or be absorbed by a new digital asset remains the defining question of our era.