In 1913, the Federal Reserve Act was passed to stabilize the economy with the Federal Reserve’s creation, but did you know that the Federal Reserve isn’t part of the government? It’s independent of government control or regulation, yet it’s trusted with effectively maintaining our economy. So, has the Fed worked as it’s proponents had publicized? On The Federal Reserve’s effectiveness as an agent of the good of the economy and for the benefit of the people’s prosperity, in that they facilitate trade, Griffin compiles an economic history under the Fed’s watch: There have been crashes in 1921 and 1929, a depression from 1929 to 1939, recessions in ’53, ’57, ’69, ’79, and ’81, and a stock market black monday in 1987. Currently, personal debt and bankruptcies are at a record high, as well as bank failures, domestic heavy industry has primarily been replaced by cheap outsourced labor, we are facing an international trade deficit for the first time in our nation’s history, 75% of downtown Los Angeles and other urban areas are now owned by foreigners, and presently, of course, we are now in a recession, leading to the greatest depression in our history. Still and Carmack claim that every time central banks are established, they claim to be economic stabilizers that intend to lend out fake money to failing banks, though without the fractional reserve banking system, central banks are not needed for that purpose. There are trends that when a central bank is established in a country, the nation ends up in debt, and the economy destabilizes. For example, when the Bank of England was created, national debt went up from £12 million in 1700 to £850 million in 1815, at the end of the Napoleonic wars (UK National Debt Clock). It is this research's purpose to fully explore this discrepancy, and as a result it is well grounded that Federal Reserve, in alignment with corporate power, is the exclusive cause of all American economic instability.
In our country, the Federal Reserve Act was engineered by banking powers such as J.P. Morgan and Rockefeller as part of the panic of 1907, when the stock market fell by 50%. Bank runs were initiated, and resulted in thousands bank failures according to butnowyouknow.wordpress.com. Still and Carmack claim the cause was major banking powers who leaned on brokerage firms to call back margin loans (the covering by the broker of 90% of a stock purchase) in masse, forcing everyone to sell in the market and withdraw all their assets from banks. Peter Joseph, in his popular documentary Zeitgeist, describes the fractional reserve banking system as the cause of the bank vulnerability to be unable to supply their depositor’s withdrawals. Such a system, Joseph explains, which is implemented today throughout, allows the loaning of more money than a bank has. This fake or new money is created by The Federal Reserve, as when dealing with our government, by expanding the credit of the government by purchasing U.S. Treasury bonds accompanied at interest. These debts are used as reserves which the Fed holds on to. The Fed then creates an extra 90% in the form of dollars, which is then given to congress (or to the banks if they issue their own bonds). A problem arises in the implementation of a fractional reserve system, in that you can’t have assets (loans) and liabilities (deposits or reserves) be the same money unless you see the loaned money as having negative, or depreciatory value. Then, when the individual banks are supplied with this money, through borrowing or a third party’s spending, they then lend it out at interest again under the same fractional reserve model, creating another fake 90% allocated for loans. The process repeats itself whenever the loaned money reenters a bank until that initial supply reaches zero, skimming interest each time over. Joseph establishes that every dollar the Federal Reserve creates is devalued by 10 times, since new money is based on no value and by it’s nature is depreciatory. If the Fed isn’t responsible for backing up the money they loan since the assets they put up are somebody else’s promises, how then can they charge interest on it? This results in an investment that is risk-free and costless to the Fed, and which self-perpetuates.
To understand this as monetary abuse, the purpose of money and responsible issuing of it must be well understood, as characterized by the online blog, MoneyRelease.com. Money’s purpose is to liquidate goods, meaning that in a monetary system, something can be traded for anything else by using money as a buffer. This is observably advantageous to the barter system, for which the monetary system was created as an alternative. A unit of currency, when introduced, is agreed to be of equal value to a certain amount of goods. More money must be created when there is a growth (more goods and services entering the economy), or reduced when the amount of goods depletes in order to keep the rate of exchange to maintain each individual’s purchasing power. Hence, the currency’s, value is equal to the amount of money in circulation divided by the amount of goods and services available in an economy . However, the Fed creates new money for profit, not to stabilize the economy. This is damaging, as they are not creating new goods or services. When that money can be expanded from one source, it is easier to control the path of the money (loans) and who is owed it (the Fed). When presented so clearly, the Fed’s authority is not only damaging, but meant to control their insolvents. Their means for profiting are achieved through interest on the money supply, so their job is to generate the greatest debt possible.
Still and Carmack establishes that The Fed control the monetary system by two methods: the volume of the money supply and interest rates. When the printing of money gives the illusion of a boom, and interest rates are lowered, more is spent through loans. Eventually, the same has to be paid back to the Fed with interest, but it is impossible to pay back the national debt by design. Since the money supply is the loan, if you gave back every dollar to the Fed, only the money supply would be covered with the interest outstanding. Inevitably, this ends in forclosures and is meant to keep the debt in place earn more interest each year to make the corporate bankers richer with no money lost during investment since they (The Fed) made it up. During the Fed’s bigger movements, wealth is taken in the short term by a halt in the ability to pay interest. When suddenly limiting the amount of private loans and increasing the interest rate, at the top, the central bank burns a fraction of the money supply they receive in interest, reducing the liquidity of the market. As a result, the economy is sickened below it’s resource availability, which is called deflation. Still and Carmack state that when more money goes through banks than is redistributed, those who have loans and the least liquidity financially (a.k.a. the poor) get sheared of their houses every time the market busts. The 1891 American Bankers Association as printed in the congressional record on April 19th, 1913, demonstrates how bankers consciously engineer these scenarios in saying, “On September 1st we will not renew our loans under any consideration. On September 1st we will demand our money. We will foreclose and become mortgagees. We can take two-thirds of the farms west of the Mississippi and thousands east of the Mississippi as well, at out own price... Then the farmers will become tenants as in England (Still and Carmack).” We add to the national debt problem by printing new debt-based currency to assist in paying off the already compiling interest. Joseph notes that the way we attempt to pay off the interest every year is wholly through income tax (which is why it was implemented), and the interest on the national debt is now consuming half of all of all our taxes. This path of reasoning prompts a crucial question: If the Fed prints paper used as a buffer, why do they charge interest on it?
What few people realize is that the income tax law, the 16th amendment, in actuality is unconstitutional, since it is a direct, unapportioned (one recipient, unallocated) tax. As addressed by Dr. Edwin Vieira, President of the National Alliance for Constitutional Money, “What is interesting about those notes [dollars] is they have been declared, or were from the beginning, declared to be obligations of the United States and to be redeemed in lawful money, and yet nevertheless, in complete disregard of Article I, Section 9, Clause 7 of the Constitution, Congress has never enacted a single statute authorizing the dollar amount of obligations that the Federal Reserve can generate out of nothing, and from which the treasury of the United States, and ultimately the taxpayers, are somehow liable as guarantors or sureties (FUTURE TAXPAYERS).”
So, did the Federal Reserve consciously engineer this scenario? The events surrounding the passing of the Federal Reserve Act will be explored for this reason. Griffin records that in 1910, seven men, representatives of J.P. Morgan and Rockefeller et al, met at the now famous Jekyll Island, off the coast of Georgia, to draw a bill allowing a system to centralize currency production privately into the control of a few hands, as whoever prints the money solely can create a monopoly (Griffin, 3). Among the present was Republican Senator Nelson Aldrich, who’s ego compelled him to lead the group to dub the draft “The Aldrich Bill”. This was against Paul Warburg’s (another banking power of Rockefeller’s caliber at the meeting) counsel, as senator Aldrich was known for his close ties to big business, and the bill was immediately rejected by congress. Retreating from taking the official vote, a new bill was redrafted, weakened, and put behind two republicans, Representative Carter Glass (VA) and Senator Robert Latham Owen (OK) (Still and Carmack). This scheme was a deception by the same banking powers in an attempt to get the bill passed, which seemed to benefit the people, as it was democratically supported. To further fool the people into accepting, senator Aldrich was even prompted to curse the passing of the bill as too restrictive big business interests. But face value deceptions were not enough to fool Congress, as the bill was even still held in contempt once read over. A final “Great Deception” occurred when the convocation had been dismissed for Christmas recess. The decision was to be finalized after reconvening. Mistakenly, the session neglected to end with sani dai, which meant that those present in congress were still eligible to vote. At the time of the bill’s unanimous passing, only three representatives were present (Still and Carmack). When congress reconvened, republican congressman Charles A. Lindbergh of Minnesota claimed that, “This act establishes the most gigantic trust on earth.…When the President signs this Act, the invisible government by the Money Power, proven to exist by the Money Trust Investigation, will be legalized.…The money power overawes the legislative and executive forces of the Nation and of the States. I have seen these forces exerted during the different stages of this bill.…” (Still and Carmack). The only step left in the bill’s passing into law was newly elected president Woodrow Wilson’s veto power. Unfortunately, his election had been funded by large corporation interests under the agreement that he would sign the bill (Still and Carmack).
Viewing the Fed’s actions and effects, the Great Depression will be used as an example. The Federal Reserve Bank from 1914 to 1919 increased by nearly 100%, and again in 1921-1929, they increased the money supply by an additional 62%, resulting in more loans and a cavalier attitude about money (Still and Carmack). Simultaneously, all brokers called in their margin loans, creating more bank runs, identical to the Panic of 1907. As noted in an edition of the then independent New York Times, on the panic of 1907, on December 24th, 1913, “[The banks] were not insolvent. They had plenty of good assets, including millions of dollars’ worth of commercial paper, most of it not yet due [to repay to the Fed]” (The New York Times). The Reserve then, in complete contradiction of their intended purpose, began to contract the money supply when banks were strung out by everyone pulling out of banks to appease the market. When the Fed held on to money, more than 16,000 competition banks shut down and countless farms and assets had been foreclosed to brokers, as portrayed by Joseph. The reserve rate had been raised, which replaced the money to be repaid with foreclosures (Still and Carmack). If the reserve rate is raised from 10% to 50%, that money comes from the loanees obliged to owe tothe banks by the system. If the Depression was intended to be fixed, then the Fed only needed to print more money. The banks would have been able to cover the demand of withdrawals, but were instead manipulated to default. The panic at the stock market, in effect, was created by simultaneous margin calls, but was not, by itself what caused the Great Depression, in contradiction to popular belief. It was the Fed that benefited and the Fed that caused it.
All money being based on debt means that the value of all of a persons ownership is worth, on the whole, how it can pay back someone, because the money created at the top is issued because of the government’s promise to pay it all back with interest. A banker starts with principle from investors, or from his own capital, which can be currency or assets. Then they loan it out at interest. The more is used as exchange, the more money is owed back to the bank. The Federal Reserve stands to profit the most from this, by being at the top of this established “interest pyramid” and the banking system will always fake most of the money as long as they can cover the withdrawals of their depositors, or then expand money and keep on cheating. This effectively puts ownership of all things that can be exchanged with the money issued by a central bank into the hands of bankers over time. Whoever profits the most from interest, ends up owning all things through claiming debt and interest. It is the belief of this paper, for this reason that bankers biggest debt they can to take a country’s assets, and has been done to countries like Zimbabwe, Italy, Japan, Chad, and Greece (The Central Intelligence Agency). Hence, the problem is the fractional reserve banking system, giving banks excessive, unnecessary power to control the volume of money supply. To end the Fed’s monopoly and control, take money printing away from the private banks’ ability. Also, a law requiring a 100% reserve banking system on all banks will end the possibility of unofficial trusts or bank failure. The government also must combine this with a regulated system which calculates the expansion or contraction of currency in proportion to our available resources to keep the economy stable. This action will progressively end the debt, but only if demanded by Congress and the citizens. The interest can be repaid as the economy recovers, or, the “claim” to the interest and the debt, can legally be denied outright. In tribute to former President Andrew Jackson, this is how the “hydra” is to be slain.
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