The process of awareness begins somewhere. A comment in passing. A line of protest in the news. Snippets of overheard conversation. A good friend of mine Chris brought this up in a conversation. He talked about the Federal Reserve and how it’s not accountable to anyone, not even the President of the United States. That got me thinking and I researched this.
My thinking was the Fed was a government organization. Not so. The Federal Reserve is a hybrid organization – a partnership between the Federal Government and large private banks. These banks have agreements in place to limit competition, preserve profits and protect their territories.
This sounded like a cartel or a monopoly. I decided to go back to the Constitution and view the US Constitution Article 1. This is what Section 10 says :
“No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.”
This is strange. The constitution prohibits the use of anything other than gold or silver as tender. And, yet before the financial implosion worldwide ( which led to the recession that we’re in today) there were all kinds of exotic financial instruments being used as collateral. But, most importantly, as Ron Paul mentions, The Fed follows a paper monetary system or Fiat currency which is in direct violation of the US constitution.
According to Ron Paul, a Fiat system or a monetary paper system is a centralized system where the government backs the system and it is not backed by anything tangible. Harvard professor Dr. Edwin Vieira talks about the National Investment Recovery Act in 1933 which created a cartel structure for almost all industries like steel, mining, paper etc and was controlled centrally by the National Recovery Administration. This was a delegation of power by the government to private powers which infuriated some people. The act was challenged on the basis of its constitutionality and the Supreme Court held that it was unconstitutional. And yet, says Dr. Vieira, the Federal Reserve has never been questioned this way.
Genesis of the Federal Reserve :
Interestingly, the Federal Reserve Act was conceived because people were concerned about the concentration of money power in the hand of the “money trust” – a group of very wealthy bankers and investors. The Act was meant to break the grip of the money trust and put control of money into the hands of the people via the politicians through the political process . The problem was that the folks who drafted the Federal Reserve system were the same people who constituted the money trust – the bankers – and who wanted their assets to be protected. They wanted a ‘Lender of last resort’ to be created just in case their assets went bad. This would enable them to get bailed out without the market correcting their indiscretions. Thus, was born the very special-interests driven Federal Reserve. The people knew nothing of the process of creation or who was involved in the creation or anything. All that was presented to them by the authorities was a rosy explanation of how the Fed would curb inflation, manage monetary policy and protect the banking system.
President Andrew Jackson did not like the idea of a central bank. He stated that it concentrated the nation’s financial strength in a single institution, it exposed the government to control by foreign interests, it aimed to make the rich richer and it exercised too much control over members of Congress. He did rid the nation of the central bank in 1832 but his hard-earned victory for his countrymen was sadly overturned in 1913, when a corrupt privately owned central bank was again foisted on the nation in the form of the Federal Reserve cartel. G. Edward Griffin, the author of The creature from Jekyll Island says that the Federal Reserve is the world’s largest and most successful scam.
So, is the Fed, Congress’s own little money printing machine?
Congress likes the Federal Reserve a lot because if they ever need money, the Federal Reserve simply gives it to them rather than them having to raise taxes. Speaking of taxes, Griffin says that income taxes were introduced in 1913, the same year, the Federal Reserve was created. Does that mean that if there’s no Federal Reserve, there would be no taxation.
Back to Congress and its unholy nexus with the Fed : According to Ron Paul, Congress gets its funding by borrowing money from the Fed. The Fed does this by simply printing more money. It’s easier for Congress to borrow money from the Fed than raise taxes as that would cost them votes. That’s how the national debt has come into being. Congress borrows money from the Fed, but then the money that they collect by way of taxation does not suffice to pay the Fed back. So, they borrow more money to pay back their previous loan as well as use some additional money for their constituencies. All this results in the injection of excessive money into the economy and fuels inflation but crucially, this is what adds to the ever-increasing national debt.
More and more money has been ( and keeps getting) printed at a rate much faster than the expansion of goods and services produced by the economy. If goods and services were growing at the same rate as the increase in money supply, the purchasing power of the monetary unit ( In this case, a dollar) would remain the same.
Unfortunately, today, that is not the case. There has been a 90% loss of purchasing power since 1913.
Today’s inflation is simply the value of money declining or as Dr. Vieira says, the loss of purchasing power. The value of currency is being eroded by the Fed’s unwholesome policies. Ron Paul calls the inflation a ‘hidden tax’.
Dr. Vieira says that to remedy this first, the government has to curtail its spending. More money should be injected into value adding businesses. The citizenry requires to educate itself and understand that we have a Fiat monetary system that is unconstitutional. More questions should be asked about why the politicians do what they do, and if that happens, according to Griffin, the possible groundswell of opinion would result in some form of meaningful change.
It is key to note that it’s not the the Federal Reserve that follows this model of operation. Most of the developed countries and some developing countries have a centralized banking model like this. The change that needs to occur has to be on a global scale.
This is a lot of food for thought. I’ll end this entry with quotes from our founding fathers and some politicians.
“This [Federal Reserve Act] establishes the most gigantic trust on earth. When the President signs this bill, the invisible government of the monetary power will be legalized….the worst legislative crime of the ages is perpetrated by this banking and currency bill.” — Charles A. Lindbergh, Sr. , 1913
“If Congress has the right [it doesn't] to issue paper money [currency], it was given to them to be used by…[the government] and not to be delegated to individuals or corporations” — President Andrew Jackson, Vetoed Bank Bill of 1836
“While boasting of our noble deeds were careful to conceal the ugly fact that by an iniquitous money system we have nationalized a system of oppression which, though more refined, is not less cruel than the old system of chattel slavery. — Horace Greeley
