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Bag the Fed!
Jerry Mazza
Online
Journal
Monday, Dec 08, 2008
Despite its name, the Federal Reserve System is
not owned by the federal government. It is actually a private
company of bankers with 12 branches or central banks that expand
and contract our money supply as they have doing for nearly 100
years.
And, even though the Fed is not part of the US government, the
Fed’s Board of seven governors is appointed by the president
and confirmed by the Senate for 14-year terms.
As we look at the Federal Reserve System, we should remember
banker Meyer Rothschild’s apocalyptic warning “Let
me issue and control a nation’s money and I care not who
writes its laws.” Really? That’s pretty cocky. But
let’s go back to the beginning, the first central bank in
America.
Dubious thanks go to that scoundrel Alexander Hamilton who lobbied
for the first private central Bank. Despite protests from many,
including Thomas Jefferson who said, “I sincerely believe
the banking institutions having the issuing power of money are
more dangerous to liberty than standing armies,” Hamilton
got his way. In 1791, Congress chartered the First Bank of the
United States for 20 years and George Washington signed off on
it. Hamilton also got to be the first Secretary of the Treasury.
Yet Jefferson’s knock was right on the money.
(ARTICLE CONTINUES BELOW)
When the charter expired in 1811, Madison, desperate to stabilize
the currency, revived it in 1816 as the Second Bank of the United
States. Both banks were private companies. For that and other
reasons (like there was no mention in the Constitution of national
banks), President Andrew Jackson hated the bank and wanted it
gone. He commented that, “The bold efforts the present bank
had made to control the government are but premonitions of the
fate that await the American people should they be deluded into
a perpetuation of the institution or the establishment of another
like it.” Jackson had to replace two Secretaries to the
Treasury who refused to remove the government’s funds and
call on former Attorney General Roger Taney to do his bidding.
This caused the Second Bank of the United States to lose its charter
in 1836 and cease operations in 1841.
In 1863, the National Banking Act created a system of national
banks. They managed to create a series of panics in 1873, 1893,
and 1907, which led to a demand for a third central banking system.
And thus, in meetings veiled in secrecy at Georgia’s Jekyll
Island, the Federal Reserve System was born in 1913, spurred on
by GOP Senator Nelson Aldrich.
Aldrich’s other players included A. Piatt Andrew, Assistant
Secretary of the Treasury and Special Assistant of the National
Monetary Commission; Frank Vanderlip, president of the National
City Bank of New York; Henry P. Davison, senior partner of J.P.
Morgan Company, and generally regarded as Morgan’s personal
emissary; and Charles D. Norton, president of the Morgan-dominated
First National Bank of New York.
Joining the group just before the secret train left New Jersey’s
Hoboken station were Benjamin Strong, also known as a lieutenant
of J.P. Morgan; and Paul Warburg, a recent immigrant from Germany
who had joined the banking house of Kuhn, Loeb. Warburg was considered
the architect of the plan devised in secret.
Six years later, a financial writer named Bertie Charles Forbes
who later founded Forbes Magazine (the present editor, Malcolm
Forbes, is his son) wrote: “Picture a party of the nation’s
greatest bankers stealing out of New York on a private railroad
car under cover of darkness, stealthily hiding hundred of miles
South, embarking on a mysterious launch, sneaking onto an island
deserted by all but a few servants, living there a full week under
such rigid secrecy that the names of not one of them was once
mentioned lest the servants learn the identity and disclose to
the world this strangest, most secret expedition in the history
of American finance. I am not romancing; I am giving to the world,
for the first time, the real story of how the famous Aldrich currency
report, the foundation of our new currency system, was written.
. . .”
Aldrich’s daughter, Abby, later married John D. Rockefeller,
Jr. and their son Nelson Aldrich Rockefeller, brother of John
D. III, Winthrop, Laurence and David, became governor of New York
and later vice president under Gerald Ford. Eek. Bottom line,
this was the crème de la crème of the financial
system creating the Federal Reserve System? The name purposely
omitted the words “Central” or “bank”
or Wall Street. It is also a curiously random fact that the dollar
of 1907 is now worth about four cents.
How the Fed controls our money
Since its inception, Wiki tells us, the Fed has controlled the
interest rates on lending money. Then, by increasing or decreasing
the money supply, it regulates the value of money. The more of
it around, the lower its values, sort of a hidden inflation. You
could say the Fed actually produces one thing: debt. Every single
buck the Fed issues is loaned at interest, with an inherent debt
amount. The Fed has a monopoly on issuing money.
We actually have Hamilton again to thank (not) for proposing
to establish the initial funding for the First Bank of the United
States through the sale of $10 million in stock, of which the
US government would buy the first $2 million in shares. Since
the government didn’t have the $2 million, Hamilton suggested
that it make the stock purchase using money loaned to it by the
bank; a very contemporary paradigm. He proposed that the loan
be paid back in 10 annual equal installments. The remaining $8
million in stock could be bought by the public in the US and overseas,
a sample of how Hamilton’s mind worked and could to this
day on Wall Street with great success.
But I digress. The Fed always increases the money supply to increase
the money owed to it. That money is also loaned out, as said earlier,
at interest, creating more debt, which equals a kind of economic
slavery because it’s impossible for the government to ever
free itself from this self-generating debt-load. The Fed also
issues bonds at interest to the public and banks and foreigners.
When the Fed wants to create more money, it buys bonds with a
simple bookkeeping entry, thereby not paying for them.
This leads us to the Fed’s other major cancer: fractional
lending, i.e. for every actual dollar in reserve, they can lend
10 to-x-number of dollars in fractional reserve. Thus banks can
create deposits by creating money with fractional lending, billions
of free money each year, less interest to depositors. It’s
no wonder that banks create and are responsible for the lion’s
share of inflation. In fact, the Fed was faulted that during the
1920s, it experimented with alternatively creating and destroying
money. The notable Milton Friedman, among many other scholars,
said the Fed helped to create the late 1920s inflated stock market
bubble which burst in 1929, after which money was tightened, adding
greatly to the pain.
The only relatively stable period in our history, an expert friend
of mine notes, came out of the New Deal’s banking reforms,
the last of which Clinton signed away. As wikipedia reports, it
was the Gramm-Leach-Bliley Financial Services Modernization Act
. . . enacted November 12, 1999, by the United States Congress.
It repealed the Glass-Steagall Act of 1933, “opening up
competition among banks, securities companies and insurance companies.
The Glass-Steagall Act prohibited a bank from offering investment,
commercial banking, and insurance services.” Now, we have
one big disastrous muddle.
“The Gramm-Leach-Bliley Act (GLBA) allowed commercial and
investment banks to consolidate. For example, Citibank merged
with Travelers Group, an insurance company, and in 1998 formed
the conglomerate Citigroup, a corporation combining banking and
insurance underwriting services under brands including Smith-Barney,
Shearson, Primerica and Traveler Insurance Corporation. This combination,
announced in 1993 and finalized in 1994, would have violated the
Glass-Steagall Act and the Bank Holding Company Act by combining
insurance and securities companies, if not for a temporary waiver
process. The law was passed to legalize these mergers on a permanent
basis. Historically, the combined industry has been known as the
financial services industry,” which fundamentally and first
serves itself your bucks.
The Fed’s never been audited by Congress
Yes, in the near century it has existed, the Fed has never had
the pleasure of being audited by Congress, yet it should audit
and control the Federal Reserve for it to be a legal institution
conforming to the Constitution of the United States. Not. A 1982
Supreme Court case determined that the Fed is an independent entity
with no oversight by government. The Reserve does issue a weekly
public balance sheet, although it has been criticized for its
“culture of secrecy” in terms of obtaining other information.
Some critics have claimed that the Federal Reserve System is a
scheme to enrich a few wealthy bankers at the expense of the public.
Could that possibly be? My god, remember that 1907 dollar worth
four 2008 cents.
In fact, to my knowledge the Fed hasn’t paid income tax
on trillions of dollars taken from taxpayers. Yet the Congressional
record claims the US government can buy the Fed back at any time
for $450 million, about half the money we pay them every day.
Are you wondering why the Congress doesn’t do just that:
buy them back or better flat out nationalize them into the Treasury,
under complete surveillance, with total transparency?
One good reason is that Congress loves the Fed because it allows
them to spend all they want without restraints, except, of course,
for that mangy national debt piling up in the background that
our kids will have to eat for Christmas. In fact, the Constitution
does say, “The Congress shall have the power . . . To coin
Money, regulate the value thereof,” yet nowhere does it
give Congress the authority to hand over this responsibility to
a bunch of private bankers. Yet, there are the basics for your
perusal.
Also, creating what is a fiat currency causes inflation and savers
are hit the hardest by this. Some who try to beat inflation become
investors in the stock market. But look how the Federal Reserve
lending practices caused the price of stock to tank in the recent
economic crisis, nearly wiping out people’s life savings.
Inflation and mismanaged policies are felt by everyone and are
reason enough to oppose the Federal Reserve. In the words of Thomas
Jefferson “‘A government big enough to give you everything
you want, is strong enough to take everything you have . . .”
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How to put the brakes on
Besides today’s government issuing its own US Notes as
the currency, they can take it over making it replenish the reserves.
This can be done so that banks can be at 100 percent reserve banking,
not fractional reserve banking. Central banks would be needed
as clearing houses and vaults for US notes. The Federal Reserve
Act would be no longer necessary and should be repealed. If this
sounds a little Ron Paulish, it is. It allows for monetary power
to be transferred back to the Treasury Department, disallowing
further creation of money by central banks.
The national debt, despite its staggering $12.3 trillion could
be reversed, and with a little help from our friends, be reversed
in a matter of several years. Getting rid of fractional lending
along with the Fed would help avoid bankruptcies, governmental
and personal inflation, deflation, and/or total financial collapse.
The Monetary Reform Act
This is as Paul advocates propose it and I understand how it
would work . . .
1. Pay off the debt with debt-free US notes. Amen.
2. Abolish Fractional Reserve banking. As the debt is paid off,
the reserve requirements of all banks and financial institutions
would be raised proportionately at the same time to absorb the
new US notes, which would be deposited and become the banks’
increased reserves. Towards the end of the first year of transition,
remaining liability of financial institutions would be acquired
by the US government in a one-time operation.
They too would be paid off with US money notes to keep US money
supply stable. At the end of the first years, all debt one hopes
could be paid, and we can enjoy the benefits of full reserve banking.
The Fed would be obsolete, oh guzzling dinosaur that it is.
3. Repeal the Federal Reserve Act and the National Banking Act
of 1864. The acts delegate money power to private organizations.
Hand back the powers to the Department of Treasury as they were
under President Lincoln, when he created bank notes, Greenbacks,
to pay for Civil War expenses. No banker affiliated with financial
institutions should be allowed to regulate banking. After the
first two years of reform, these acts would serve no useful purpose.
4. Withdraw the US from the IMF (International Money Fund), the
World Bank and the BIS (the Bank of Internal Settlements). They
further concentrate interests and powers of private banking over
the world’s economy and the US’s. We must withdraw
from them. The harmless functions they perform like currency exchanges
can be accomplished by newer organizations limited to those functions.
Such a Monetary Reform Act would guarantee that the amount of
money in circulation stay stable, causing neither inflation nor
deflation. In the last three decades alone, the FED has doubled
the US money supply every 10 years. That fact and fractional reserve
lending are the real causes of inflation and the reduction in
our buying power.
The money supply should increase slowly to keep prices stable
and in proportion to population growth, roughly around 3 percent
a year, and not at the whim of a group of bankers meeting in secret.
In fact, all future decisions about how much money must be in
the US economy must be made on statistics of population and the
price-level index. The new monetary regulators and the Treasury
Departments (in the past called the Monetary Committee) would
have zero discretion in this matter except in times of declared
war.
This would insure a steady stream of stable money growth, 3 percent
a year, and result in stable prices and no sharp changes in money
supply. To make sure the process is completely open and honest,
all deliberations would be public not secret as meetings of the
Fed Board of Governors are today. How do we know this will work?
Because these steps remove the two causes of economic instability:
the Fed-interest-bled dollar and fractional (fictional) reserve
banking -- and the newest one as well, the Bank of Internal Settlements
(BIS) mentioned above. Most important, the danger of depression
would be eliminated.
Bottom line
No matter how we cut it, the Fed needs to be bagged. It has bound
and gagged our financial system for too long and the damage has
been savage. There is a movement called THE FED IS DEAD, basically
putting forth these ideas which are definitely worth considering,
otherwise we all drown down the money hole while the rich and
greedy sail away with everything we own. It’s that simple.
Act now. This offer will be repeated. That is, until everyone
gets it.
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INFOWARS:
BECAUSE THERE'S A WAR ON FOR YOUR MIND
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