Abolish the Federal Reserve System – A Huge Impediment to Human Freedom, Dignity and Progress
This blog is full of odes to the dignity and greatness of humanity, and blessings for those who have labored in anonymity and persecution to bring about this potential in all beings for the benefit of mankind. As a result, it has been littered with the refuse of the bigoted and unintellectual comments of those who precisely have struggled to prevent mankind from developing freedom from servitude. True to their technique of dissimulation, that have set about accusing others of the very thing they seek, and, as George Orwell so delicately imaged it, continued to misuse language deliberately and frankly calling white “black” and day “night”, so as to keep the very systems in place which hold back human progress.
But something very important has happened this month in American history, perhaps as important as the Civil War if not more so, in that it involves the potential unraveling of the world slavery system –
The Federal Reserve Transparency Act of 2009 (H.R. 1207), a bill introduced in the U.S. House of Representatives of the 111th United States Congress by Congressman Ron Paul (TX-14). The bill proposes a reformed audit of the Federal Reserve System (the “Fed”) before the end of 2010. I would encourage each and every American to support this bill and restore our free government.
The Federal Reserve Act (ch. 6, 38 Stat. 251, enacted December 23, 1913, 12 U.S.C. ch.3) is the act of Congress that created the Federal Reserve System, the central banking system of the United States of America, which was signed into law by President Woodrow Wilson. Before the 1913 establishment of the Federal Reserve, the banking system had dealt with periodic crises (such as in the Panic of 1907) by suspending the convertibility of deposits into currency. The system nearly collapsed in 1907 and there was an extraordinary intervention by an ad-hoc coalition assembled by J. P. Morgan. The bankers demanded in 1910-1913 a central bank to address this structural weakness. The supposed idea [as illustrated by the critical scene in the Jimmy Stewart Christmas movie It’s a Wonderful Life (1946)] is to create a reserve of wealth to prevent bank runs. Let us say that Mr. Smith, a rich man, puts one million dollars into Bank XYZ. Now let us say the same Mr. Smith, now near death, has some sort of religious crisis and suddenly fears going to hell. He decides, therefore, to withdrawal his one million dollars all at once and give it away, so as to guarantee a trip to heaven. The problem is that Bank XYZ has actually loaned Mr. Smith’s money in the meantime to Ms. Hamptom’s flower business, the Gomez family’s mortgage, etc. So the bank doesn’t actually have the money at the bank to cover Mr. Smith’s sudden need for a withdrawal. If enough people does this at once, say because of a sudden fear about the future of the economy or whatever, that’s called a bank run. Similar situations in the past, such as in 1907, have caused severe economic crisis and a critical loss of confidence in the bank industry, currency as a means of trade, etc. In times of economic crisis, individuals often want to withdraw their money to put it into tangibles such as land or gold. This tendency has a way, from the bank industry’s point of view in particular, of magnifying sudden panics or losses of confidence in what is essentially a house of cards. The Federal Reserve was supposedly created to thereby serve as a pool of funds that Bank XYZ could call upon to honor Mr. Smith’s sudden withdrawal. In that way, it was supposed to stabilize the United States against economic crisis. Unfortunately, there were no crises to defend against except for a suspect and immoral usury system being shaken anyway, and all the Federal Reserve System really did was create a system of world-wide slavery and episodic economic crisis. By merely asking the Federal Reserve to have transparency, to show us, the American people what they really are and what they are really doing and for whom, Ron Paul has subtlety and cleverly forced the hand of a most corrupt and evil system of domination by an immoral few at a time when their machinations are most visible in their effect and most susceptible to destruction.
Federal Reserve System is “an independent entity within the government, having both public purposes and private aspects”. In particular, neither the Federal Reserve System nor its component banks are overseen or controlled by the US Federal Government, but bluntly act as loan-sharks to banks across the US.
According to the Federal Reserve acts and amendments over the years, there are presently five different parts of the Federal Reserve System:
1.The presidentially appointed Board of Governors of the Federal Reserve System, a governmental agency in Washington, D.C.
2.The Federal Open Market Committee (FOMC), which oversees Open Market Operations, the principal tool of national monetary policy.
3.Twelve regional privately-owned Federal Reserve Banks located in major cities throughout the nation, which divide the nation into 12 districts, each with its own nine-member board of directors.
4.Numerous other private U.S. member banks, which have required amounts of stock in their regional Federal Reserve Banks, which does pay dividends like any other stock, but cannot be bought or sold publicly on the stocks.
5.Various mysterious advisory councils which provide some sort of sinister coordination or planning to this multi-tentacled and unaudited process.
It is widely believed that Woodrow Wilson rushed the system into law after election largely for the economic benefit of financial entities that contributed heavily to his election campaign. Oddly enough, while he is often portrayed as being pushed into this by lust for power and with remorse, as being our only president with a PhD, he left behind political writings that reveal a distaste for freedom and a desire for a more tyrannical system which abolished the founding father’s system of branches of government with checks and balances long before he ever held office. Under the influence of Walter Bagehot’s The English Constitution, Wilson saw the United States Constitution as pre-modern, cumbersome, and open to corruption. He wrote in the early 1880s:
“I ask you to put this question to yourselves, should we not draw the Executive and Legislature closer together? Should we not, on the one hand, give the individual leaders of opinion in Congress a better chance to have an intimate part in determining who should be president, and the president, on the other hand, a better chance to approve himself a statesman, and his advisers capable men of affairs, in the guidance of Congress?”
The first chairman of the Fed, McAdoo, was an entrepreneur. He was the president of the Hudson & Manhattan Railroad Company, which built the tubes connecting Manhattan and Hoboken and operated by PATH today. He worked on Wilson’s 1912 presidential campaign as noted earlier. Wilson named him Treasury Secretary in 1913. And in March 1914, he became engaged to Wilson’s daughter. So the president was also his soon-to-be father-in-law, quite the incestuous relationship with controlling monetary policy Wilson had hoped to have in the first place. In fact, in the picture beginning this article, McAdoo’s armband is worn to commemorate the death, four days earlier, of his mother-in-law, Ellen Axson Wilson, and some say the death of capitalism and human freedom in general. Interesting other facts about the above picture are that the standing gentleman is Paul Warburg of Hamburg, Germany, of a successful Jewish banking family. He is also of the family banking firm of M.M. Warburg & Company, still a member bank of the Fed, and chairman of Wells Fargo, still receiving Fed handouts to this day. He is also the founder of the Brookings Institute, still one of the aforementioned advisory councils of the Fed to this day!
In addition to controlling the American economy, the Federal Reserve has the authority to act as “lender of last resort” by extending credit to depository institutions or to other entities in unusual circumstances involving a national or regional emergency, such as an economic crisis, where failure to obtain credit would have a severe adverse impact on the economy.
Through its discount and credit operations, Reserve Banks provide liquidity to banks to meet short-term needs stemming from seasonal fluctuations in deposits or unexpected withdrawals. Longer term liquidity may also be provided in exceptional circumstances. The Fed is able to make money through these loans by charging a rate, known as the discount rate (officially the primary credit rate).
By making these loans, the Fed serves as a buffer against unexpected day-to-day fluctuations in reserve demand and supply. This contributes to the effective functioning of the banking system, alleviates pressure in the reserves market and reduces the extent of unexpected movements in the interest rates. For example, on September 16, 2008, the Federal Reserve Board authorized an $85 billion loan to stave off the bankruptcy of international insurance giant American International Group (AIG). The Federal Reserve System’s role as lender of last resort is criticized for shifting risk and responsibility away from lenders and borrowers and placing them on others, namely us middle-class taxpayers, in the form of taxes and/or inflation. This enables the banks and companies that are bailed out to avoid responsible management at our expense, and enables the banks that are doing the rescuing to actually profit from these transactions at our expense, not through any penalty or consequence of the offending institution.
Interestingly, the Fed also has over $11 billion in gold, which is a holdover from the days the government used to back US Notes and Federal Reserve Notes with gold. This means that in times of economic crisis, when tangibles such as gold rise greatly in value, the Fed sees a profit in the rise of the value of its holdings. The Fed has approximately a tenth of the world’s gold, and the member banks are estimated to trade approximately 75% of the world’s foreign exchange trade, or Forex market, while at the same time being able to control the value of the dollar vis a vis other currencies at will. The value of gold held by the Fed at this time of high gold value is around $310 trillion, and represents almost 80% of the world’s gold supply, which can be bought or sold as needed.
So what we are talking about is a group of private banks and companies in the hands of a few families, a surprising number of which are not United States corporations or citizens, many of whom have a similar degree of control over their own countries economic policy and national banking, capable of profiting greatly by economic crisis which they are capable of manufacturing by means of their hold of the reins of economic policy. In fact, the periodic economic cycles we are experiencing over time are in fact a by-product of the policy of those capable of profiting from these crises.
The Federal Reserve’s control of interest rates is an unnecessary and counterproductive interference in the economy. Rates should be naturally low during times of excessive consumer saving (because lendable money is abundant) and naturally high when high net volumes of consumer credit are extended (because lendable money is scarce). These critics argue that setting a baseline lending rate amounts to centralized economic planning, and inflating the currency amounts to a regressive, incremental redistribution of wealth.
Austrian School economists focus on the amplifying, “wave-like” effects of the credit cycle as the primary cause of most business cycles. They assert that inherently damaging and ineffective central bank policies, like those of the Federal Reserve, are the predominant cause of most business cycles, because they tend to set interest rates unnaturally low for too long, resulting in excessive credit creation, speculative “bubbles” and unnaturally low savings. The business cycle unfolds in the following way. Low interest rates tend to stimulate borrowing from the banking system. This expansion of credit causes an expansion of the money supply, through the money creation process in a fractional reserve banking system. This in turn leads to an unsustainable “monetary boom” during which the “artificially stimulated” borrowing seeks out diminishing investment opportunities. This boom results in widespread failed investment, causing capital resources to be misallocated into areas which would not attract investment if the money supply remained stable. The global economic crisis of 2008 represents an example of the Austrian business cycle theory’s dependability.
It is also a widely-accepted criticism of the Fed, first proposed by Milton Friedman and Anna Schwartz, that the Fed exacerbated the 1929 recession, sparking the Great Depression. After the stock market crashed in 1929, the Fed continued to contract the money supply and refused to save struggling banks threatened with runs from failure; this mistake, critics charge, allowed what might have been a relatively mild recession to explode into catastrophe, as discussed in their work A Monetary History of the United States, 1867-1960. The Great Depression was caused by the fall of the money supply. Friedman & Schwartz note that “[f]rom the cyclical peak in August 1929 to a cyclical trough in March 1933, the stock of money fell by over a third.” The result was what Friedman calls the “Great Contraction” — a period of falling income, prices, and employment caused by the choking effects of a restricted money supply. The mechanism suggested by Friedman and Schwartz was that people wanted to hold more money than the Federal Reserve was supplying. People thus hoarded money by consuming less. This, in turn, caused a contraction in employment and production, since prices were not flexible enough to immediately fall.
The current Fed Chairman Ben S. Bernanke, even acknowledged this in a 2002 speech:
Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.
I think I would prefer to audit their actions in the future rather than take their “good word,” especially as it has occurred repeatedly since then, particularly when the next generation of beneficiaries of these few families needs to yet again harvest the work and ideas of the world for the continuation of their parasitic life-cycle.
In a 2002 interview with Peter Jaworski, Friedman said that ideally he would “prefer to abolish the federal reserve system altogether” rather than try to reform it, because it was a flawed system in the first place. He would prefer to replace the organization with a mechanical system that would increase the money supply at some fixed rate, and thought that “leaving monetary and banking arrangements to the market would have produced a more satisfactory outcome than was actually achieved through government involvement.” I would have to agree. But I must say that Ron Paul’s urgent plea that the American people at least be allowed to be informed as to the workings of the Federal Reserve is certainly logical and virtually unarguable, especially if the workings of the Fed involve the periodic construction of waves of starving families and ruined lives for the benefit of a few families around the world, as they appear to.
You see, there is no witchcraft. The controlling influences are a handful of WASP and Jewish families, about 50/50, who no doubt boringly and dutifully attend their weekly church or synagogue services. After all, what need is there for the drinking of goat’s blood or black masses when you can watch infants starve and grown men bleed tears for their dying wives while you dine on gold-leaf cake? The organization of Adam Weishaupt and it’s members such as Goethe and the founding fathers like Thomas Jefferson in their Joseph Campbellian embrace of humanism have little to do with these fascist machinations. Indeed the forces of the Enlightenment, the lovers of classical culture, and Jesuits and Catholic scholars such as myself and John Kennedy have always stood in stark battle against the forces of totalitarianism and degradors of human freedom. This is why John Kennedy was shot in the first place, for railing against the Fed and endorsing human freedom, potential and the brotherhood of man. Compare this to Woodrow Wilson, author of the Federal Reserve, abolisher of the design of our illuminated founding fathers, and acknowledged Klansman. Listening to the speech below, remember that Kennedy was killed for daring to cry out for change, and let his martyrdom not be in vain. Join Ron Paul and myself and call your representative today and insist on transparency for the Federal Reserve and begin the end of human slavery to a greedy and unintelligent few.