“Paper money eventually returns to its intrinsic value ---- zero.” – Voltaire
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“The Federal Reserve in collaboration with the giant banks has created the greatest financial crisis the world has ever seen. The foolish notion that unlimited amounts of money and credit created out of thin air can provide sustainable economic growth has delivered this crisis to us. Instead of economic growth and stable prices, (The Fed) has given us a system of government and finance that now threatens the world financial and political institutions. Pursuing the same policy of excessive spending, debt expansion and monetary inflation can only compound the problems that prevent the required corrections. Doubling the money supply didn’t work, quadrupling it won’t work either. Buying up the bad debt of privileged institutions and dumping worthless assets on the American people is morally wrong and economically futile.” - Representative from Texas Ron Paul questioning Federal Reserve Chairman Ben Bernanke
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I’ve read and witnessed various pundits during the Presidential campaign describe Ron Paul as crazy. The corrupt tax and spenders in Congress know their days would be numbered if they followed his vision of government. After reading his tremendously sane rebuke of Ben Bernanke and the policies of his Federal Reserve, I’m reminded of a classic scene from Seinfeld.
Jerry: “Ah, you're crazy."
Kramer: "Am I? Or am I so sane that you just blew your mind?!"
Jerry: "It's impossible!"
Kramer: "Is it? Or is it so possible that your head is spinning like a top?!"
Jerry: "It can't be."
Kramer: "Can it? Or is your entire world just crashing down all around you?"
Jerry: "Alright, that's enough."
Kramer: "Yaaaaaaahhh!!!"
Ron Paul’s scathing assessment of the Federal Reserve’s primary role in creating the financial crisis and his raking of Chairman Bernanke over the coals is so accurate, truthful and sane that it should blow your mind. Mr. Bernanke must have felt like his head was spinning like a top while Ron Paul gave him a tutorial in basic economics. Mr. Paul’s noble efforts to Audit the Fed (HR 1207) and eventually to rid the country of its insidious control over our lives will bring the pillars of the Federal Reserve building crashing down upon Mr. Bernanke in his mahogany paneled, gold plated boardroom with ornate chandeliers.
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The worldwide financial system experienced a 6.8 magnitude earthquake in September 2008. The very foundations of our economy were shaken to their core. The fear exhibited by government officials, politicians, and the public was palpable and real. For a few weeks there was the distinct possibility that the system would come crashing down. A massive printing of dollars by the Federal Reserve, the clandestine buying up of toxic assets by the Federal Reserve, behind the scenes deals with the biggest banks, covert currency swap deals with foreign Central Banks, and forcing the FASB to change accounting rules to allow banks to fraudulently value bad loans, temporarily staved off the final chapter in the 96 year old diabolical experiment in currency manipulation.
The moment when the system stopped functioning was our “Minsky Moment”. Hyman Minsky was an American economist and professor of economics at Washington University. Dr. Minsky put forward theories linking financial market vulnerability, in the normal life cycle of an economy, with speculative investment bubbles produced by financial markets. Minsky declared that in good times, when corporate cash flow rises beyond what is needed to pay off debt, a speculative bubble develops, and soon thereafter debts exceed what borrowers can pay off from their incoming revenues, which in turn produces a financial emergency. As a result of such dangerous debt bubbles, banks tighten credit availability, even to companies with good credit, and the economy enters recession.
This movement of the financial system from stability to crisis is the “Minsky Moment". At this point, a major selloff begins due to the fact that no counterparty can be found to bid at the asking prices previously quoted, leading to a swift and steep collapse in markets and a dramatic drop in market liquidity. What Dr. Minsky failed to address was that the Federal Reserve has been responsible for every financial crisis in the United States since 1913.
A History of Crisis & Political Influence
Creation
The history of the Federal Reserve is shrouded in mystery, with bankers and corrupt politicians calling the shots from the very outset. On the evening of November 22, 1910 , Senator Aldrich and A.P. Andrews (Assistant Secretary of the Treasury Department), Paul Warburg (a naturalized German representing Baron Alfred Rothschild's Kuhn, Loeb & Co.), Frank Vanderlip (president of the National City Bank of New York), Henry P. Davison (senior partner of J.P. Morgan Company), Charles D. Norton (president of the Morgan-dominated First National Bank of New York), and Benjamin Strong (representing J. P. Morgan), left Hoboken, New Jersey on a train with a mission to gain complete control over the currency of the United States.
Forbes magazine founder Bertie Charles Forbes described the meeting on Jekyll Island, Georgia that brought about the Federal Reserve:
“Picture a party of the nation's greatest bankers stealing out of New York on a private railroad car under cover of darkness, stealthily riding a 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... The utmost secrecy was enjoined upon all. The public must not glean a hint of what was to be done. Senator Aldrich notified each one to go quietly into a private car of which the railroad had received orders to draw up on an unfrequented platform. Off the party set. New York's ubiquitous reporters had been foiled... Nelson (Aldrich) had confided to Henry, Frank, Paul and Piatt that he was to keep them locked up at Jekyll Island, out of the rest of the world, until they had evolved and compiled a scientific currency system for the United States, the real birth of the present Federal Reserve System, the plan done on Jekyll Island in the conference with Paul, Frank and Henry... Warburg is the link that binds the Aldrich system and the present system together. He, more than any one man, has made the system possible as a working reality.”
On December 19, 1913 Congress had two versions of a Federal Reserve bill with forty major differences. Many Senators left town for the Christmas break and President Wilson didn’t anticipate a final bill until January. In a matter of hours, the forty differences were reconciled and the bill was voted on with 22 of the 88 Senators not in town. It passed and was on Wilson’s desk for signature by December 22. He refused to sign it, until convinced by Bernard Baruch, a major contributor to his campaign and Wall Street millionaire. The passage of the Federal Reserve Act became known as "the Christmas massacre"
During the legislative process Senator Henry Cabot Lodge Sr. wisely pointed out the bleak future we would endure by giving bankers control over our destiny.
“The powers vested in the Federal Reserve Board seem to me highly dangerous especially when there is political control of the Board. I should be sorry to hold stock in a bank subject to such dominations. The [Federal Reserve] bill as it stands seems to me to open the way to a vast inflation of the currency.… I do not like to think that any law can be passed that will make it possible to submerge the gold standard in a flood of irredeemable paper currency.”
Congressman Charles A.Lindbergh Sr. had this to say after the passage of the bill:
“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. The financial system has been turned over to the Federal Reserve Board. That Board administers the finance system by authority of a purely profiteering group. The system is Private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people's money. From now on, depressions will be scientifically created.”
Mandate(s)
The Federal Reserve Act of 1913 created the Federal Reserve Bank with the following mandate:
An Act To provide for the establishment of Federal reserve banks, to furnish an elastic currency, to afford means of rediscounting commercial paper, to establish a more effective supervision of banking in the United States, and for other purposes.
The original mandate was clearly limited. The idea was that a Central Bank would be able to keep the periodic panics like the Panic of 1907 from ever happening again. It appears that four innocuous words opened up Pandora’s Box and unleashed evils upon all mankind - “and for other purposes”. The bankers who control the Federal Reserve along with their politician protectors have dramatically expanded the scope, authority and influence of the Federal Reserve with each scientifically created crisis that has occurred in the last 96 years. They are attempting to grab more power as we speak.
Since 1913 the Federal Reserve has amassed more and more authority and now has vast responsibility and control over our lives. The Federal Reserve website lists the following functions:
- conducting the nation's monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates
- supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers
- maintaining the stability of the financial system and containing systemic risk that may arise in financial markets
- providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation's payments system
By any reasonable measure, the Federal Reserve has failed miserably in all their responsibilities. When organizations fail in a capitalist system, they are supposed to be replaced, not given more responsibility. They are now an immense entity with its insidious tentacles throughout the worldwide financial system.
Arrogance & Incompetence
In 1915, according the Federal Reserve annual report, they operated with 35 total employees. Today, they operate with over 20,000 employees costing $1.4 billion per year. The cost to operate the system exceeds $3.3 billion. With 20,000 of the “best” and “brightest”, you would think someone would have predicted the current financial crisis before it hit. But, no. Ben Bernanke thought the underpinnings of the economy were strong, housing was on a firm foundation, and the subprime issue was confined. This instance of incompetence is just one of many since 1913. When examining the history of the Federal Reserve you realize that it has overwhelmingly been led by weak, pliable, politically motivated men with little or no backbone. Of the 14 Federal Reserve Chairmen, only two could be considered independent and competent. The evidence of political influence, incompetence, and arrogance is conclusive.
FED HALL OF SHAME
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Marriner Eccles Arthur Burns George Miller Alan Greenspan Ben Bernanke Reserved Larry Summers
Marriner Eccles (1934 – 1948)
- Banker and one of the architects of FDR’s Emergency Banking Act of 1933 that vastly expanded the powers of the President and Federal Reserve. It gave the President the ability to declare a national emergency and have absolute control over the national finances and foreign exchange of the United States in the event of such an emergency. The Emergency Banking Act was introduced on March 9, 1933, to a joint session of Congress and was passed the same evening amid an atmosphere of chaos and uncertainty as over 100 new Democratic members of Congress swept into power determined to take radical steps to address banking failures and other economic malaise. The sense of urgency was such that the act was passed with only a single copy available on the floor and most legislators voted on it without reading it. (Hmm. Remind you of any recent legislation?). One-third of all the banks in the country were shut down permanently after the passage, further concentrating banking wealth in a few mega-banks.
- Roosevelt chose him to be Fed Chairman because he agreed to support the massive spending projects to fend off the ravages of the Great Depression. He fully embraced the Keynesian policies of government intervention in free markets to artificially fend off recessions.
- He considered monetary policy, the primary purpose of the Federal Reserve, of secondary importance, and as a result he allowed the Federal Reserve to be controlled by the interests of the President and Treasury.
- During World War II, Eccles pledged to the President to keep the interest rate on Treasury bills fixed at 0.375 percent. It continued to support government borrowing after the war ended, despite the fact that the CPI rose 14% in 1947 and 8% in 1948, and the economy was in recession.
- He was a key architect of the World Bank and International Monetary Fund, which have perpetuated poverty throughout the world while centralizing economic power among a few dominant countries.
Arthur Frank Burns (1970 – 1978)
- Columbia professor of economics who never worked a day in the private sector in his lifetime and possibly the weakest Fed Chairman in history.
- In his book Six Crises, Richard Nixon blamed his defeat to John F. Kennedy in 1960 on restrictive Fed policy and the resulting tight credit conditions and slow growth. After finally winning the Presidency in 1968, Nixon named Burns to the Fed Chairmanship in 1970 with instructions to ensure easy access to credit when Nixon was running for reelection in 1972.
- Burns appeared to show some backbone and resisted Nixon’s demands, but after negative press about him was planted in newspapers by Nixon’s henchmen and, under the threat of legislation to dilute the Fed’s influence, Burns and other Governors succumbed to political pressure.
- Burns believed that Fed action should try to maintain an unemployment rate of around 4%. Burns’ ultra- loose monetary policies resulted in inflation, which Nixon attempted to manage through wage and price controls. After the 1972 election, price controls began to fail and by 1974 the inflation rate was 12.3%. The annual average rate of consumer price inflation was 9% during his term.
- The single biggest financial event in U.S. history occurred during Burns’ watch. By the early 1970s, as the costs of the Vietnam War and Great Society domestic spending accelerated inflation, the U.S. was running a balance of payments deficit and a trade deficit, the first in the 20th century. Other nations began demanding fulfillment of America’s “promise to pay” — in the form of gold from the U.S., in exchange for paper dollars. The dollar was plunging against all foreign currencies. U.S. gold reserves were being depleted. The world had lost faith in the U.S. government’s will to cut its budget and reduce its trade deficit. To stabilize the economy and combat runaway inflation, on August 15, 1971 President Nixon imposed a 90-day wage and price freeze, a 10% import surcharge, and closed the gold window, making the dollar non-convertible to gold. On that day, the dollar became a piece of paper with no intrinsic value, rather than 1/35th of an ounce of gold. The dollar has lost 93% of its purchasing power versus gold since this fateful decision.
George Miller (1978 – 1979)
- The first Federal Reserve Chairman from private industry who did such a horrible job that he was promoted to Secretary of the Treasury.
- He was a member of the think tank the Club of Rome, which believed the common enemy of humanity is man, so democracy may not be well suited to the tasks ahead. However, the threat of pollution, global warming, water shortages, and famine can be used to fulfill humanity's need for a common adversary. (Sounds like an early version of Al Gore).
- Jimmy Carter selected Miller in 1978 in the midst of an economic crisis. Inflation was running at 6.7% in 1977 and oil prices were soaring. Miller maintained his Krugman-like Keynesian belief that inflation could "prime the pump" of the economy, and would be self-correcting. He pursued a strongly dovish policy and refused to raise interest rates. The effect of this moronic policy was to send the dollar's value spiraling downward. In November 1978, only 11 months into his term, the dollar had fallen nearly 34% against the German Mark and almost 42% against the Japanese Yen.
- In an unprecedented example of his weakness, Miller was outvoted by the Board of Governors at a meeting in 1979 where he opposed an increase in the discount rate. When he was “promoted” to Treasury Secretary in 1979 inflation was out of control, running at 14%. A Federal Reserve Chairman with a backbone, Paul Volcker, applied the shock therapy needed to crush inflation.
- Steven Beckner, in his book Back from the Brink: The Greenspan Years described the dreadful politically influenced performance of the Fed Chairmen during the 1970’s:
“Under Arthur Burns, who chaired the Fed from 1970 to 1978, and under G. William Miller, who was chairman from January 1978 to August 1979, the Fed provided the monetary fuel for an inflation that began as a flicker and grew into a fearsome blaze... If Nixon appointee Burns lit the fire, Miller poured gasoline on it during the administration of President Jimmy Carter. Without question the most partisan and least respected chairman in the Fed's history, this former Textron executive worked in tandem with fellow Carter appointee, Treasury Secretary W. Michael Blumenthal, in pursuit of monetary policies that were expansionist domestically and devaluationist internationally. The goals were to spur employment and exports, with little thought to the dollar's value. By early 1980, inflation was running at 14%.”
Alan Greenspan (1987 – 2006)
"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.” - Alan Greenspan from an article written in 1966 entitled “Gold and Economic Freedom”
- The quote above would indicate a man whose principles in sound economic theory could not be compromised. That proved to be dreadfully wrong, as Alan Greenspan turned out to be the most political, Wall Street pleasing, bubble inducing Chairman of all time. His reign of power set the stage for the greatest financial collapse in U.S. history.
- He studied economics at Columbia under Arthur Burns, where he must have learned how to buckle to political pressure and please whichever party was in power. His pandering to Washington insiders and Wall Street bankers prove that he betrayed his true beliefs in a strong currency backed by gold.
- Alan Greenspan systematically encouraged changes to the CPI index that have understated it by 4% to 5% for two decades. The result has been to cheat senior citizens of their Social Security income, overstate GDP, and artificially keep interest rates low. The insertion of owner’s equivalent rent, replacing steak with hamburger, and hedonistic adjustments were Orwellian measures used to mislead the American public.
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- During his first few years as Fed Chairman he successfully handled the stock market crash of 1987 and George Bush blamed him for losing the 1991 election by keeping monetary policy too tight, causing the 1991 recession. He worked well with Bill Clinton in keeping inflation and interest rates on a downward path, resulting in strong economic growth in the 1990’s.
- Greenspan’s hubris and belief in his own infallibility led him to use monetary policy to “save the world” in 1997 and 1998. During the Asian financial crisis of 1997—1998, Greenspan flooded the world with dollars, and organized a Wall Street bailout of the reckless, irresponsible hedge fund Long Term Capital Management. These choices by Greenspan began two decades of bailing out failure. The “Greenspan Put” became known throughout the world. Everyone on Wall Street knew you could take excessive risk and if your gamble failed resulting in “systematic risk”, Greenspan would flood the system with dollars and save your ass.
- After the Dot.com bubble burst, the Y2K phony scare and the 9/11 attacks, Greenspan committed the worst offence of his 20 year monetary reign of terror. Greenspan initiated a series of interest cuts that brought the Federal Funds rate down to 1% in 2004 and left it at that level for over a year. He purposely created a housing bubble in order to artificially prop up the American economy after the huge stock market losses. The excess liquidity unleashed by Greenspan caused lending standards to deteriorate resulting in the housing bubble of 2004-2006 and the market meltdown beginning in 2008. His loose monetary policy resulted in a plunging dollar, surging commodity prices and humungous trade deficits.
- Greenspan’s unyielding belief in unfettered markets, unregulated derivatives, adjustable rate mortgages for all, home equity extraction as a spending source and subprime lending to poor people combined to cause a financial crisis that still threatens to destroy the American financial system. He denies responsibility for the financial crisis, but his own words condemn him:
“Besides sustaining the demand for new construction, mortgage markets have also been a powerful stabilizing force over the past two years of economic distress by facilitating the extraction of some of the equity that homeowners have built up over the years.” – November 2002
“Innovation has brought about a multitude of new products, such as subprime loans and niche credit programs for immigrants. Such developments are representative of the market responses that have driven the financial services industry throughout the history of our country … With these advances in technology, lenders have taken advantage of credit-scoring models and other techniques for efficiently extending credit to a broader spectrum of consumers. … Where once more-marginal applicants would simply have been denied credit, lenders are now able to quite efficiently judge the risk posed by individual applicants and to price that risk appropriately. These improvements have led to rapid growth in subprime mortgage lending; indeed, today subprime mortgages account for roughly 10 percent of the number of all mortgages outstanding, up from just 1 or 2 percent in the early 1990s.” – April 2005
- Alan Greenspan sold his soul to the devil of Washington DC power and influence. He loved the accolades and headlines he received as the most powerful man in the world. The Maestro could pull the levers and make markets do as he wished. The man who knew that Federal Reserve manipulation caused the Great Depression disregarded his own words and caused the worst economic calamity since the Great Depression.
"When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve's attempt to assist Great Britain who had been losing gold to us because the Bank of England refused to allow interest rates to rise when market forces dictated (it was politically unpalatable). The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain's gold loss and avoid the political embarrassment of having to raise interest rates. The "Fed" succeeded; it stopped the gold loss, but it nearly destroyed the economies of the world, in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market-triggering a fantastic speculative boom." - Alan Greenspan from an article written in 1966 entitled “Gold and Economic Freedom”
Ben Bernanke (2006 - ?)
- Harvard trained economist who has spent his entire life in academia and government service. As an “expert” on the Great Depression, Dr. Bernanke is 100% wrong in his assessment of its causes. He believes the Depression was caused by the Federal Reserve reducing the money supply in the early 1930’s. He should talk to the Alan Greenspan from 1966. The Federal Reserve caused the Great Depression through its easy money policies during the 1920’s. The expansion of the money supply led to an unsustainable credit-driven boom. (Hmm. Does this remind you of any similar instances?).
- In his famous 2002 “Helicopter Ben” speech, Bernanke previewed exactly what he would do as Federal Reserve Chairman in the current economic environment. Read his words carefully because he has followed the script to the tee. He has printed over a trillion dollars in the last year. Tax cuts have been rolled out. The dollar is being devalued. The only thing left is confiscation of gold. Is that next? :
“Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.”
“Although a policy of intervening to affect the exchange value of the dollar is nowhere on the horizon today, it's worth noting that there have been times when exchange rate policy has been an effective weapon against deflation. A striking example from U.S. history is Franklin Roosevelt's 40 percent devaluation of the dollar against gold in 1933-34, enforced by a program of gold purchases and domestic money creation. The devaluation and the rapid increase in money supply it permitted ended the U.S. deflation remarkably quickly.”
“A broad-based tax cut, for example, accommodated by a program of open-market purchases to alleviate any tendency for interest rates to increase, would almost certainly be an effective stimulant to consumption and hence to prices. Even if households decided not to increase consumption but instead re-balanced their portfolios by using their extra cash to acquire real and financial assets, the resulting increase in asset values would lower the cost of capital and improve the balance sheet positions of potential borrowers. A money-financed tax cut is essentially equivalent to Milton Friedman's famous "helicopter drop" of money.”
- Despite his Ivy League education and all of the supposed brilliant resources at his disposal, Bernanke has shown a remarkable ability to not see the housing bubble or the collapse of the financial system. He was convinced in 2005 that the housing market was strong and healthy. He was sure that the subprime problems were confined and would not spread into the greater economy. He now assures the public that he will know the proper time to withdraw the monstrous amount of stimulus he has pumped into the world economy before hyperinflation takes hold. Does his track record give you comfort that he will correctly figure out the right time to withdrawal the stimulus?
- Bernanke and Hank Paulson used their positions of power to force Ken Lewis, the CEO of Bank of America, to follow through on their acquisition of Merrill Lynch and to withhold knowledge of billions in losses from shareholders and the public. They threatened to remove Lewis as CEO if he did not agree. The SEC should be investigating this cover-up, but is not.
- After promising a more transparent Fed, Bernanke has done the complete opposite. He continues to withhold the names of all financial institutions that have borrowed from the Fed and will not reveal the worthless collateral that they have put up for those loans. The Fed has lent in excess of $2.2 trillion to banks. The Fed has refused to reveal any information regarding these loans. Bloomberg News has sued the Fed under the Freedom of Information Act to force them to reveal where $2.2 trillion of taxpayer money has gone. Investment Manager Ted Forstmann’s opinion was, “It’s your money; it’s not the Fed’s money. Of course there should be transparency.”
- Representative Ron Paul has introduced HR 1207 which would have the GAO audit the Federal Reserve every year and issue a report to Congress. Every public and most private companies have an annual independent audit. It is a reasonable and smart thing to do. Operational weaknesses and fraud are often uncovered in these audits. The bill has 282 co-sponsors. Mr. Transparency Ben Bernanke wants no part of getting audited. Operating in the shadows is preferable. His reasoning is laughable. The Fed has proven to be anything but independent, stability is not the first word that comes to mind when discussing our financial system, and the dollar has lost 95% of its purchasing power since 1913 :
“My concern about the legislation is that if the GAO is auditing not only the operational aspects of the programs and the details of the programs but making judgments about our policy decisions would effectively be a takeover of policy by the Congress and a repudiation of the independence of the Federal Reserve would be highly destructive to the stability of the financial system, the Dollar and our national economic situation.” – Ben Bernanke
Inflation, Instability, Crisis, & Collapse
“Mr. Chairman, we have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve banks. The Federal Reserve Board, a Government board, has cheated the Government of the United States out of enough money to pay the national debt. The depredations and the iniquities of the Federal Reserve Board and the Federal reserve banks acting together have cost this country enough money to pay the national debt several times over. This evil institution has impoverished and ruined the people of the United States; has bankrupted itself, and has practically bankrupted our Government. It has done this through defects of the law under which it operates, through the maladministration of that law by the Federal Reserve Board and through the corrupt practices of the moneyed vultures who control it.” - Rep. Louis T. McFadden, Chairman of the Committee on Banking and Currency. Congressional Record 12595-12603 (10 June 1932)
In the next election, Congressman McFadden’s opponent received a phenomenal amount of campaign contributions from unknown donors and defeated Mr. McFadden. Never fight the Fed. For those who prefer graphs, below is a picture that requires no words. The United States grew rapidly for 120 years with virtually no inflation. With the creation of the Federal Reserve in 1913, the inflation genie was let out of the bottle. Nixon’s closing of the gold window in 1971 unleashed a tsunami of inflation, covered up by statistical manipulation by the Fed and government.
Source: Wikipedia
For those who prefer seeing what real things cost, below is a chart with some key financial items for the average person. If it feels like your family has fallen behind since 1971, you’re right. Your pay has not come close to keeping up with the cost of a new house, a new car or gas to fill up that car. This is why it takes two parents working to just to keep up with inflation.
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Items |
1971 |
2007 |
% Increase |
|
Average Cost of new house |
$28,000 |
$314,000 |
1121% |
|
Median HH Income |
$10,300 |
$58,700 |
570% |
|
Average Monthly Rent |
$150 |
$730 |
487% |
|
Cost of a gallon of Gas |
$0.40 |
$2.80 |
700% |
|
Average New Car Price |
$3,430 |
$28,000 |
816% |
|
United States postage Stamp |
$0.08 |
$0.41 |
512% |
|
Movie Ticket |
$1.50 |
$7.00 |
467% |
The 14 men who have occupied the position of Federal Reserve Chairman should have occupied the office with a huge dose of humbleness. The complexity of financial markets makes it impossible for anyone to pull the levers of monetary policy in order to generate the result that you wish for. Humans are incapable of understanding the millions of interactions the makeup world commerce. The Federal Reserve cannot control the emotions or irrational behavior of investors. The Federal Reserve mandate of moderate long-term interest rates has clearly not been met. The Fed Funds Rate has plotted a path of extremes over the decades, ranging from 0% to 19%, not exactly stable. The Federal Reserve has consistently set rates too low, leading to credit bubbles, which always end in recession or depression. Free market pricing would not be manipulated or influenced by political considerations or agendas.
Source: Wikipedia
The mandate of maximum employment has also been a miserable failure. The easy credit policies of the Federal Reserve during the 1920’s led to the Great Depression with unemployment rates exceeding 20%. Unemployment has averaged between 5% and 10% consistently since the formation of the Federal Reserve. Government bureaucrats have attempted to hide the true rate of unemployment through the use of deceptive categories and changing the rules of the game. True unemployment, consistent with the way it was measured during the 1930’s, is currently over 16%. This level of “maximum” employment is due to the policies of the Federal Reserve.
Source: Wikipedia
The facts prove beyond a shadow of a doubt that the Federal Reserve has failed in every one of its mandates. Inflation has destroyed the value of the dollar. Interest rates and employment have been violently erratic. The Fed has been manipulated by politicians, showing a complete lack of independence. Only two of the fourteen Chairmen have been truly independent and competent – Paul Volcker & William McChesney Martin. The incompetence and arrogance of the other Chairmen have brought the country to its knees. The final chapter is about to be written.
Bad Moon Rising
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I see the bad moon arising.
I see trouble on the way.
I see earthquakes and lightnin'.
I see bad times today.
Don't go around tonight,
Well, it's bound to take your life,
There's a bad moon on the rise.
I hear hurricanes ablowing.
I know the end is coming soon.
I fear rivers over flowing.
I hear the voice of rage and ruin.
Hope you got your things together.
Hope you are quite prepared to die.
Looks like we're in for nasty weather.
One eye is taken for an eye.
Bad Moon Rising - Creedence Clearwater Revival
There have been 18 recessions since the creation of the Federal Reserve, including the worst Depression in the history of the country and today’s ongoing Depression which will set records of its own. Most have lasted 12 to 14 months with a decline in Real GDP of 2% from peak to trough. The amount of fiscal and monetary stimulus as a % of GDP generated by the Federal Reserve and politicians during these recessions has averaged 2.5%, excluding the Great Depression and the recent recessions.
The stimulus response by Herbert Hoover and the Federal Reserve to the economic collapse of 1929 – 1933 was unprecedented at 8.3% of GDP. This was to combat a 27% decline in real GDP. George W. Bush and Alan Greenspan almost reached that level of stimulus at 7.2% to combat a 0.2% decrease in real GDP in 2001. That excessive response ultimately produced the housing bubble and today’s far worse financial crisis. Excessive is too mild of a term to describe the response by George W, Barack O, and Ben B. to the current downturn. Real GDP has declined by 1.8%. In 1953 the economy suffered a 2.7% real decline in GDP. The Eisenhower Administration did nothing. Miraculously, the economy recovered. The fiscal stimulus response to our 1.8% decline in GDP has been 29.9% of GDP. Our downturn has been 1/15th the decline of the Great Depression and our Keynesian response has been 3.6 times as great. If you were to add all of the guarantees by the Federal Reserve, FDIC, and Treasury, the response has been 12 times larger than the response to the Great Depression. This historically excessive response will have unintended consequences. It always does.
|
|
|
Length |
Decline in |
Stimulus as a % of GDP |
|||
|
Peak |
Trough |
(months) |
real GDP |
Monetary |
Fiscal |
Combined |
|
|
August-29 |
March-33 |
43 |
27.0% |
3.4% |
4.9% |
8.3% |
|
|
May-37 |
June-38 |
13 |
3.4% |
0.0% |
2.2% |
2.2% |
|
|
November-48 |
November-49 |
11 |
1.7% |
-2.2% |
5.5% |
3.3% |
|
|
July-53 |
May-54 |
10 |
2.7% |
0.0% |
-1.4% |
-1.4% |
|
|
August-57 |
April-58 |
8 |
3.2% |
0.0% |
3.2% |
3.2% |
|
|
April-60 |
February-61 |
10 |
1.0% |
0.7% |
1.0% |
1.7% |
|
|
December-69 |
November-70 |
11 |
0.2% |
0.3% |
2.4% |
2.7% |
|
|
November-73 |
March-75 |
16 |
3.1% |
0.9% |
3.1% |
4.0% |
|
|
January-80 |
July-80 |
6 |
2.2% |
0.4% |
1.1% |
1.5% |
|
|
July-81 |
November-82 |
16 |
2.6% |
0.3% |
3.5% |
3.8% |
|
|
July-90 |
March-91 |
8 |
1.3% |
1.0% |
1.8% |
2.8% |
|
|
March-01 |
November-01 |
8 |
0.2% |
1.3% |
5.9% |
7.2% |
|
|
December-07 |
|
15 |
1.8% |
18.0% |
11.9% |
29.9% |
* Est. |
Source: Grant’s Interest Rate Observer
“The way the system is supposed to work, when times like this come, the solid people, the competent people, take over the assets from the incompetent people and then you start over again from a sound base, this is what South Korea did, this is what Russia did, and they did fine. What they’re doing this time is they’re taking the assets away from the competent people and giving them to the incompetent people and saying now you compete with the competent people with their assets and their money – it’s terrible economics and it’s not going to work, it hasn’t worked before and it’s not going to work this time. The way the system is supposed to work is when you make a mistake you go broke, he refused to let people go broke, he saved his friends and now we’re all having to pay for them.” – Jim Rogers
The moral hazard created by the Federal Reserve’s and the government’s response to every financial difficulty faced by banks and corporations have left our financial system teetering on the brink of collapse. Our largest banks are insolvent. Over 300 smaller regional banks will fail in the next year. Our National Debt is approaching $12 trillion and will surpass $15 trillion by the end of Obama’s term. Foreclosures will exceed 3 million this year. Almost 50%, or 25 million homes, will be underwater on their mortgage loans by 2011. It has gotten so bad that it takes the leader of a socialist country to provide capitalistic free market common sense to American leaders:
“This crisis did not come about because we issued too little money but because we created economic growth with too much money and it was not sustainable. If we want to learn from that, the answer is not to repeat the mistakes of the past.” – Angela Merkel
Final Solution
“You have to choose between trusting to the natural stability of gold and the natural stability of the honesty and intelligence of the members of the Government. And, with due respect for these gentlemen, I advise you, as long as the Capitalist system lasts, to vote for gold.” – George Bernard Shaw
Our fiat currency system has proved to be a wretched failure. Within the next five years a final crisis will bring an end to this diabolical experiment in hubris. Man is not smarter than the free markets. The U.S. dollar is a piece of paper. It only has value because people have trust that the government issuing the paper is financially stable with rational fiscal policies. This does not describe the United States of today. When the next crisis causes the dollar to collapse and uncontrollable inflation to result, abolition of the Federal Reserve will become feasible. Average Americans have been victims of the boom and bust caused by the Federal Reserve policies. The sole beneficiaries have been bankers, politicians, the military industrial complex, and the super rich elite.
Journalist H.L. Mencken understood overbearing government, the ignorant masses and the power of a few brave men:
“All government, of course, is against liberty. The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary. Most people want security in this world, not liberty.”
“The most dangerous man to any government is the man who is able to think things out... without regard to the prevailing superstitions and taboos. Almost inevitably he comes to the conclusion that the government he lives under is dishonest, insane, intolerable. It doesn't take a majority to make a rebellion; it takes only a few determined leaders and a sound cause.”
The abolition of the Federal Reserve will not be without a ferocious, possibly deadly, fight. Without a fiat currency, Democrats would not be able to tax and spend on their social program agenda. Republicans would not be able to tax and spend on their beloved military industrial complex and the wars it encourages. A sound commodity backed currency would force government to become smaller and dramatically reduce the obscene profits of bankers. A commodity backed currency would favor saving and investment versus borrowing and consuming. If there is one thing that should have been learned in the last two years is that an unsustainable trend will not be sustained. The actions taken by the Federal Reserve and the Obama Administration have created an unsustainable situation for the U.S. dollar. Representative Ron Paul makes the most persuasive case for abolishing the Federal Reserve:
“The Fed has followed a consistent policy of flooding the economy with easy money, leading to a misallocation of resources and an artificial "boom" followed by a recession or depression when the Fed-created bubble bursts. With a stable currency, American exporters will no longer be held hostage to an erratic monetary policy. Stabilizing the currency will also give Americans new incentives to save as they will no longer have to fear inflation eroding their savings. Those members concerned about increasing America's exports or the low rate of savings should be enthusiastic supporters of this legislation.
Though the Federal Reserve policy harms the average American, it benefits those in a position to take advantage of the cycles in monetary policy. The main beneficiaries are those who receive access to artificially inflated money and/or credit before the inflationary effects of the policy impact the entire economy. Federal Reserve policies also benefit big spending politicians who use the inflated currency created by the Fed to hide the true costs of the welfare-warfare state. It is time for Congress to put the interests of the American people ahead of the special interests and their own appetite for big government.
Abolishing the Federal Reserve will allow Congress to reassert its constitutional authority over monetary policy. The United States Constitution grants to Congress the authority to coin money and regulate the value of the currency. The Constitution does not give Congress the authority to delegate control over monetary policy to a central bank. Furthermore, the Constitution certainly does not empower the federal government to erode the American standard of living via an inflationary monetary policy.
In fact, Congress' constitutional mandate regarding monetary policy should only permit currency backed by stable commodities such as silver and gold to be used as legal tender. Therefore, abolishing the Federal Reserve and returning to a constitutional system will enable America to return to the type of monetary system envisioned by our nation's founders: one where the value of money is consistent because it is tied to a commodity such as gold. Such a monetary system is the basis of a true free-market economy.”
We have a sound cause. It only takes a few determined leaders to start the rebellion.
Join me at www.TheBurningPlatform.com to fight the Fed.
74 Comments
Yahu
True, but how do we kill it? I'm afraid it's one of those things that is going to outlast us! Wasn't Ron Paul going to audit it?
In the Know
Bernanke is a total twit and is risking a lot more then sad writings in his personal memoirs about another failure of QE. The Central Banking model itself must evolve or die, it's that simple. We should all be working on the replacement model and there is plenty of historical data to pour through to find out what works and what doesn't in lending models.
Anonymous
KILL IT NOW!
robmu1
Great piece, Jim. The biggest problem we have here is that only a fraction of a percentage point of Americans understand what/who the Fed is. Ask around your office today. It's much too complex to try to understand while you worry about the job and the kids and gas and food and terrorism and so forth. Another insidious problem that you surface and that we will not be able to defeat: the entitlement mentality that rules in the U.S. today. Everyone wants a bailout. Everyone wants debt forgiveness. Everyone wants everything and they sure as hell don't want to pay for it. Now add the Obamanistas to this stew. They/he was elected on promises to basically give eveyone a bunch of free stuff and have the 'rich' pay for it. There should be no pain because the Obamanistas want to get reelected. So print a bunch of paper money and bail out the losers and tell the banks they can't charge 'excessive' fees and spring for health care and off we go.
I'm going to buy some more gold coins this week.
ptownman
The FED will let the Treasury default before it will kill itself. In other words before it totally destroys the dollar it will tell the Treasury to go F#<>k itself. Yep, the Treasury will have to default on some of it's obligations. But first an foremost, the FED must save the BANKING CARTEL, with a very high period of inflation.
ptownman
I think one of my thumbs up came from no other than Ben Bernanke himself.
Expat
I studied economics, history, and political science. I don't see anything or any way to change the system. The US "consumer" has the attention span of a gnat and gets his opinion from Fox. A revolution, nationwide strike (Larry Flynt), or radical change in our system is unlikely if not impossible...or so it seems. Of course, I am re-reading The Black Swan so I know history is not made up of things we can see or predict.
The FED is an integral part of the existing power structure. Call us all tin-foil hat wearing conspiracy nuts, but there is a structure out there that is working against the common man. Of course, the system always has, but that is not a defense. I don't believe that each GS employee dons black robes and holds secret cabbalistic meetings with Lloyd. I don't think Congress works together with the specific goal of enslaving the middle class, destroying the environment, and enriching Wall Street. I suspect that the heads of Wall Street banks collude in the worst way, but the rest is just more of a happy coinciding of goals.
GS employees want to make lots of money and do so in any way that won't get them thrown into a NY State jail with large, HIV positive cellmates. Congressmen simply want to get re-elected and therefore do whatever those with money want them to do; additionally, they are surrounded by aides and lobbyists and have no real clue what is going on in the world. I don't believe Bernanke is evil (in the James Bond or cartoon sense) but he is simply protecting what he was trained to believe is the best possible system.
That these people should be dragged into the streets and beaten is not in question. That this will happen certainly is.
Anonymous
this fed regulates monetary policy. they have done a piss poor job as of late but i think we are turning around. also your graph on home priace increase is wrong people back in the 20's were only paid 2 dollars a day vs 100 a day now.
JimQ
By Ambrose Evans-Pritchard
Published: 5:40PM BST 18 Jul 2009
Comments 346 | Comment on this article
Events have already forced Premier Brian Cowen to carry out the harshest assault yet seen on the public services of a modern Western state. He has passed two emergency budgets to stop the deficit soaring to 15pc of GDP. They have not been enough. The expert An Bord Snip report said last week that Dublin must cut deeper, or risk a disastrous debt compound trap.
A further 17,000 state jobs must go (equal to 1.25m in the US), though unemployment is already 12pc and heading for 16pc next year.
Education must be cut 8pc. Scores of rural schools must close, and 6,900 teachers must go. "The attacks outlined in this report would represent an education disaster and light a short fuse on a social timebomb", said the Teachers Union of Ireland.
Nobody is spared. Social welfare payments must be cut 5pc, child benefit by 20pc. The Garda (police), already smarting from a 7pc pay cut, may have to buy their own uniforms. Hospital visits could cost £107 a day, etc, etc.
"Something has to give," said Professor Colm McCarthy, the report's author. "We're borrowing €400m (£345m) a week at a penalty interest."
No doubt Ireland has been the victim of a savagely tight monetary policy - given its specific needs. But the deeper truth is that Britain, Spain, France, Germany, Italy, the US, and Japan are in varying states of fiscal ruin, and those tipping into demographic decline (unlike young Ireland) have an underlying cancer that is even more deadly. The West cannot support its gold-plated state structures from an aging workforce and depleted tax base.
As the International Monetary Fund made clear last week, Britain is lucky that markets have not yet imposed a "penalty interest" on British Gilts, given the trajectory of UK national debt – now vaulting towards 100pc of GDP – and the scandalous refusal of this Government to map out any path back to solvency.
"The UK has been getting the benefit of the doubt, both in the Government bond market and also the foreign exchange market. This benefit of the doubt is not going to last forever," said the Fund.
France and Italy have been less abject, but they began with higher borrowing needs. Italy's debt is expected to reach the danger level of 120pc next year, according to leaked Treasury documents. France's debt will near 90pc next year if President Nicolas Sarkozy goes ahead with his "Grand Emprunt", a fiscal blitz masquerading as investment.
There was a case for an emergency boost last winter to cushion the blow as global industry crashed. That moment has passed. While I agree with Nomura's Richard Koo that the US, Britain, and Europe risk a deflationary slump along the lines of Japan's Lost Decade (two decades really), I am ever more wary of his calls for Keynesian spending a l'outrance.
Such policies have crippled Japan. A string of make-work stimulus plans - famously building bridges to nowhere in Hokkaido - has ensured that the day of reckoning will be worse, when it comes. The IMF says Japan's gross public debt will reach 240pc of GDP by 2014 - beyond the point of recovery for a nation with a contracting workforce. Sooner or later, Japan's bond market will blow up.
Error One was to permit a bubble in the 1980s. Error Two was to wait a decade before opting for monetary "shock and awe" through quantitative easing.
The US Federal Reserve has moved faster but already seems to think the job is done. "Quantitative tightening" has begun. Its balance sheet has contracted by almost $200bn (£122bn) from the peak. The M2 money supply has stagnated since January. The Fed is talking of "exit strategies".
Is this a replay of mid-2008 when the Fed lost its nerve, bristling over criticism that it had cut rates too low (then 2pc)? Remember what happened. Fed hawks in Dallas, St Louis, and Atlanta talked of rate rises. That had consequences. Markets tightened in anticipation, and arguably triggered the collapse of Lehman Brothers, AIG, Fannie and Freddie that Autumn.
The Fed's doctrine – New Keynesian Synthesis – has let it down time and again in this long saga, and there is scant evidence that Fed officials recognise the fact. As for the European Central Bank, it has let private loan growth contract this summer.
The imperative for the debt-bloated West is to cut spending systematically for year after year, off-setting the deflationary effect with monetary stimulus. This is the only mix that can save us.
My awful fear is that we will do exactly the opposite, incubating yet another crisis this autumn, to which we will respond with yet further spending. This is the road to ruin.
vinceF
Great article Jim!
Ron Paul should be the head of a commission that gathers evidence to put Paulson and Bernanke behind bars for their fleecing of America.
So many great quotes in your article most notably from the CNBC-annointed king of the world Alan Greenspan.
I especially like this one from your article: "… Where once more-marginal applicants would simply have been denied credit, lenders are now able to quite efficiently judge the risk posed by individual applicants and to price that risk appropriately."
CommonSense
All people who have 'self educated' themselves with common sense and simple logic can already understand what is going on. However how do you educate mostly financially illiterate gullible culture (which comprise majority, unfortunately!!! & growing exponentially worldwide) that derive most of their information from media controlled by corporations due to their advertising clouts. May be write this stuff in rap & deliver on ipods ?
JennJohnson
The Federal Reserve is like the All-Powerful Wizard of Oz. They are terrified of being exposed for who and what they really are. They have morphed into a glorified but toxic SPE with the ability to create money. They have artificially lowered the discount rate to manufacture credit which in turn stimulates the economic activity by increasing consumption. This made the Fed even more powerful every time the tool was used as it created a giant Ponzi scheme in which the growth of asset values either depended on inflation or the growth of credit. As long as everyone plays the game, all is well and credit does not need to be repaid and can keep multiplying. Once one person gets cold feet and wants out of the game and there is no longer anyone willing or able to replace them at the table, the entire system starts to collapse. Bear Stearns was a warning. Lehman pushed the system over the edge.
The Federal Reserve came to the rescue. With credit scarce, the deleveraging process was beginning and deflation would take hold. If the Fed was not in bed with the politicians, they would let the process play itself out as the pain would be great in the short term, but smaller in magnitude in the end (unfortunatley, we are way past that point today). Since politicians want to stay in power, and they feared their power would be obliterated in a deleveraging process, the ability to mitigate business cycles becomes key. The Fed accommodates the politicians and short term seemingly beneficial policies are made with disastrous effects in the long run. Of course they do not admit to being pushed around by politicians as the Great and All-Powerful Oz did not admit to smoke and mirrors until the curtain was pulled back.
The Fed’s balance sheet is filled with toxic assets making it no better than the toxic SPEs that sunk and are sinking many banks. As the Fed bought up these securities in the open market it helped to lower the trading spread and thus artificially raise prices. As long as the Fed keeps buying and creates artificial confidence in these securities, many banks can continue to hobble along.
The ultimate end game for the Fed has to be to create inflation as this is the only way that the Fed does not collapse from its toxic balance sheet. Whether or not the Great and All-Powerful Oz can do it remains to be seen. However, if they are forced to show their hand through an audit, all confidence will be destroyed and the Federal Reserve with it. The ramifications of that will be great.
Be careful what you wish for because it may come true.
Forgiven
Great article Jim. Our nation stands upon very unsettled ground right now. Many people are starting to see, for the first time, that their elected representatives don't really represent their best interests. They resent being lied to, manipulated, and ripped off without so much as a "please" and "thank you." The building anger will erupt. It is taking the present form of angry town hall meetings. If they begin to feel they have nothing to lose, there may well be blood.
JimQ
We will not go to a commodity backed currency until the Federal Reserve finishes the job of destroying the last 5 cents of value left in the USD since 1913.
Go to the BLS inflation calculator and enter $1.00 in 2009 and see what it is worth in 1913. Interesting that the BLS begins the calculator in 1913. Must be a coincidence.
data.bls.gov/cgi-bin/c...
frances snoot
Novista
Jim, you've covered all the bases with this one.
Now it needs wider distribution ... is there a Plan?
therooster
We already have commodity backed currency, Jim. It's just not run by the central banks and/or government and on that note, why would anyone want them to get involved anyway ? They have their own role. It's actually complementary when looked upon from a future vantage point, but while we are in a state of "incompletion", it simply looks to be polarized.
Governments and central banks have been following a script. Once it completes, we will be using real-time gold backed currency on mass. There's nothing to stop us all from using it now other than the marketing has been weak. Debt free store of value has already married up with instant global liquidity for gold and silver. Just have a look at any precious metal payment processor and you'll see.
A floating dollar was indispensable to the concept of real-time gold payment systems. Gold had to float in real time for gold to be an effective money simply because it's so rare. Meeting demand for gold-money on the basis of having any fixed peg was ridiculous. Under the rules of a peg, more currency meant needing more gold. Unrealistic given the production and supply limitations. This is why gold got the bad rap (sleight of hand) of being "deflationary". It wasn't deflationary. There just wasn't enough weight to go around on the basis of the rules of having a fixed peg.
If you can't meet demand with physical weight, what does the market do ? Raise the price ! Gold's floating status was necessary for gold to be an effective form of money in the future and this is only one reason that the fixed peg had to go. The Bretton Woods system did not fully work, but it did play an important part in allowing the USA to lead the world toward real-time gold money by throwing a blanket over the whole world and getting a centralized dollar. Structure ! They pulled the peg later. After gold was allowed to float, it was relegated to a role of commodity, but only because its practical role as money would have to wait for an effective way of splitting the gold by weight (with an increased trade value) and also providing for an effective distribution concept on the gold currency. In 1971, P.C.'s were still a dream. Networks were a dream too, but now that we have them, splitting the weight on fully backed gold title is rather academic. This is how gold payment processors work. Accounts are fully backed and denominated in weight. Ownership of the gold is decentralized to each and every account holder.
There's no financial crisis in terms of looking for a design or a model. There are several working models in the market and they've been operating like clockwork for several years. There's only a marketing challenge, one that is being directed by "the stick" as the stick cannot openly support such an evolution for the sake of the dollar's role, which also plays an important part in the life of gold backed currency on the basis of real-time and currency pricing of good and services with the world's economy. We price in currency, not weight. The dollar cannot go to zero. It's use must simply merge, while also competing with gold. They can co-exist.They can also integrate in real time.
We are not here to destroy, but to fulfill.
Demand must come up with the answers and support the market for gold and digital payment systems. The stick is making sure of it. Take "the carrot". It's a whole lot nicer and it will disempower the sting of the stick as the books get balanced. The evil is simply in the imbalance.
frances snoot
jimmayjvf
Great article as usual Mr. Quinn!
Every one of those Fed induced burst bubbles has been followed by a reduction in interest rates in order to stimulate more credit to pump up another bubble.
Where are interest rates now? Zero. Do you think banks will start paying us to deposit money? No.
The Fed is now out of bullets. There is nowhere else for them to go other than to print.
I think there is something else in mind out there. Something that has never been done before.
Thoughts?
LOZ is unhappy in Santa Rosa, CA
This article really opens one's eyes to the folly of the Federal Reserve. Perhaps, President Wilson should have boldly stated the words "the year of 1913 will be remembered as the year of infamy, with the passage of the Federal Reserve and the Federal Income Tax." The truth of the matter, it will be an uphill struggle to repeal the Federal Reserve. Our only hope is to appoint a man or woman of vision to make the hard choices to help our economy and not yield to political pressures.
Mr. Ben Bernanke and the Secretary of the Treasury should be fired, along with Alan Greenspan should be indicted for his roll at the Federal Reserve...
rds2301
/
Market Manipulation at Marketoracle Aug 20, 2009 - 01:44 AMBy: Robert_Singer
“Things do not happen. Things are made to happen.” John F. Kennedy
The Fed didn’t miss anything; the October meltdown was an inside job.
Capitalism never made sense
Professor Ebeling, the Ludwig von Mises professor of Economics at Hillsdale College, understood something was wrong when he wrote: "the perverse development and evolution of historical capitalism, the institutions necessary for a truly free-market economy have been either undermined or prevented from emerging."
But when he claimed, "it is the principles and the meaning of a free-market economy that must be rediscovered" in order to overcome the burden of historical capitalism and save liberty, he should have written that principles must be rediscovered in order to prevent the planet from attempted murder (ecocide).
American "capitalism" and our consumer economy never made economic, environmental or common sense—unless the goal was ecocide.
Capitalism and a not-so-free market economy based on consumer products, that is, products we are manipulated to want, not need, was never sustainable. Consumers consume…the resources of the planet.
Who is responsible?
Arianna said it’s time to "recognize the natural order of things: that is, the very people responsible for the economic collapse not only are still in power, but are still lining their pockets with outrageous windfalls -- courtesy of the American taxpayer.”
The people responsible for the October collapse, our Federal Reserve, also get credit for the windfalls of “Monopoly Money”, created out of thin air, which financed our consumer society.
They are the private credit monopoly of rich and predatory moneylenders that “prey upon the people of the United States for the benefit of themselves.” [1]
For the Benefit of the “middle class” is a more accurate statement.
Those predatory moneylenders gave the middle class the highest standard of living in the world.
Recall when the American economy appeared headed into a recession at the end of the dot-com bubble, the Federal Reserve began slashing short- term interest rates until they reached a historically low one percent. The move re-inflated the economy by allowing homeowners to extract $750 billion in equity from their homes—up from $106 billion in 1996—and apply the dollars toward a multitude of consumer items and other credit card debt.
As interest rates plummeted and alleged home equity artificially soared, buyers were able to afford first and second homes, and they did it by taking out risky mortgages with "teaser rates" similar to those offered by the credit card industry. Even as interest rates adjusted upward, the sponsoring banks used complicated financial derivatives to resell the risky mortgages as "asset-backed paper."
As housing prices edged downward and mortgage rates inched upward, the recession was put on hold with the help of an astonishing 10 to 12 credit card offers per month being delivered to some consumer mailboxes. The credit card companies issued 1.5 billion cards to 158 million cardholders and promised an improbable zero percent interest—some deals for up to 18 months. (Similar to mortgage debt, the credit card debt is put into pools also known as derivatives that are then resold to investment houses, other banks and institutional investors.)
Thank those rich and predatory moneylenders for the short-term interest rates and the liquidity that allowed the debt to be pooled, sold and resold.
But blame them because our hyper-shopping has wreaked havoc on the planet.
read the rest at http://www.marketoracle.co.uk/Article12874.html
rds2301
Oops left a paragraph out, should read:
Was the 2008 Financial Collapse An Inside Job?
Maybe it’s the smoke from Mt. Vesuvius that keeps Arianna Huffington and the financial community from seeing that the economic collapse has nothing to do with the Fed "missing" the warning signs leading up to the October meltdown.
“Things do not happen. Things are made to happen.” John F. Kennedy
The Fed didn’t miss anything; the October meltdown was an inside job.
Capitalism never made sense
Professor Ebeling, the Ludwig von Mises professor of Economics at Hillsdale College, understood something was wrong when he wrote: "the perverse development and evolution of historical capitalism, the institutions necessary for a truly free-market economy have been either undermined or prevented from emerging."
But when he claimed, "it is the principles and the meaning of a free-market economy that must be rediscovered" in order to overcome the burden of historical capitalism and save liberty, he should have written that principles must be rediscovered in order to prevent the planet from attempted murder (ecocide).
American "capitalism" and our consumer economy never made economic, environmental or common sense—unless the goal was ecocide.
Capitalism and a not-so-free market economy based on consumer products, that is, products we are manipulated to want, not need, was never sustainable. Consumers consume…the resources of the planet.
Who is responsible?
Arianna said it’s time to "recognize the natural order of things: that is, the very people responsible for the economic collapse not only are still in power, but are still lining their pockets with outrageous windfalls -- courtesy of the American taxpayer.”
The people responsible for the October collapse, our Federal Reserve, also get credit for the windfalls of “Monopoly Money”, created out of thin air, which financed our consumer society.
They are the private credit monopoly of rich and predatory moneylenders that “prey upon the people of the United States for the benefit of themselves.” [1]
For the Benefit of the “middle class” is a more accurate statement.
Those predatory moneylenders gave the middle class the highest standard of living in the world.
Recall when the American economy appeared headed into a recession at the end of the dot-com bubble, the Federal Reserve began slashing short- term interest rates until they reached a historically low one percent. The move re-inflated the economy by allowing homeowners to extract $750 billion in equity from their homes—up from $106 billion in 1996—and apply the dollars toward a multitude of consumer items and other credit card debt.
As interest rates plummeted and alleged home equity artificially soared, buyers were able to afford first and second homes, and they did it by taking out risky mortgages with "teaser rates" similar to those offered by the credit card industry. Even as interest rates adjusted upward, the sponsoring banks used complicated financial derivatives to resell the risky mortgages as "asset-backed paper."
As housing prices edged downward and mortgage rates inched upward, the recession was put on hold with the help of an astonishing 10 to 12 credit card offers per month being delivered to some consumer mailboxes. The credit card companies issued 1.5 billion cards to 158 million cardholders and promised an improbable zero percent interest—some deals for up to 18 months. (Similar to mortgage debt, the credit card debt is put into pools also known as derivatives that are then resold to investment houses, other banks and institutional investors.)
Thank those rich and predatory moneylenders for the short-term interest rates and the liquidity that allowed the debt to be pooled, sold and resold.
But blame them because our hyper-shopping has wreaked havoc on the planet.
read the rest at http://www.marketoracle.co.uk/Article12874.html
Anonymous
A superb analysis! For those who are intrigued by the above information and desire a more all-encompassing analysis on the Federal Reserve I highly recommend "The Creature from Jekyll Island" by Edward Griffin. That book will change your entire perspective on how the world works and show the darker side of the federal reserve, more specifically how they pull the strings behind every major conflict/war and profit handsomely by funding both sides. This institution is far more vile & evil than the above information demonstrates. We need transparency to help wake up the masses. Bernake is terrified of HR1207 and his professionally hired lobbying won't help his cause....though i suppose you should never be too confident with Nancy Pelosi & Barney Frank in their current positions of power. The only problem is ending the fed means the current system must collapse. Which it is on the brink of doing none-the-less, but the coming years are going to be very difficult. I smell revolt but don't foresee any significant revolution until the USD currency crisis occurs. Nevertheless the time to sit around complaining has passed & the time for action has come. I myself will be in attendance at the 9/12 tax protest in washington dc sporting my "End the Fed" T-shirt with pride informing the masses of the ultimate corruption that is the federal reserve, i suggest all those reading this get organized and take action as well. Just remember this one vital piece when you protest so as not to discredit the movement; it's not about Left vs Right, it's about Liberty vs Tyranny.
Tom LaMar
This just in to one of Ron Paul's sites : (maybe there's some hope; how do we help with this information?)
NEW YORK (Reuters) - A federal judge on Monday ruled against an effort by the U.S. Federal Reserve
to block disclosure of companies that participated in and securities covered by a series of emergency
funding programs as the global credit crisis began to intensify.
- Fed lost this case 8-24-09---Bloomberg LP v. Board of Governors of the Federal Reserve System,
U.S. District Court, Southern District of New York (Manhattan), No. 08-9595.
- Chief District Judge Loretta Preska of the federal court in Manhattan
- Preska concluded the Fed "improperly withheld agency records in response to a FOIA request by
conducting an inadequate search,"
-(Reporting by Jonathan Stempel, editing by Leslie Gevirtz)
-See this report at : http://www.campaignforliberty.com/wire.php?view=7102
Tony D
That Jekyll Island story is unreal. After reading that I did some googling of the true draftsman at that meeting, Paul Warburg. (Some of you may already know this but I thought it was interesting). He was elected the director of Wells Fargo in 1910 until he resigned in 1914 following his appointment to the Federal Reserve Board. He didn't even move to the United States until 1902 when he was 34 years old, and didn't become a US citizen until 1911. It's amazing to me that a person from Germany with less than 10 years in this country was given the authority to create something so big that it would change the face of American fiscal policy forever. Fast forward 95 years and Wells Fargo was one of the first banks to get bailout funds - the biggest amount awarded in a single shot: $25 billion tax dollars. Coincidence?
It really is amazing that so few men can have such an impact on so many. I thought this was against everything our founding fathers wanted. What America needed was a Ben Franklin or Abraham Lincoln at that Jekyll Island meeting.
therooster
If you each had access to a form of money that had the following qualities, would you be proactive in letting other people know about it ?
1) Debt free in it's creation. A true asset, unencumbered.
2) Store of value qualities because of physical supply dicipline as per the market.
3) Instant global liquidity
It is already here. As per design, there is no financial crisis. For those who golf, they will relate to this next point: There is only paralysis by analysis.
Open your real-time gold money accounts today. Be the decentralized solution in the grass.
JimQ
I received an email this morning from a relative of Representative McFadden from Pennsylvania. He said that someone tried to assasinate the Representative twice. "Someone" really didn't like him speaking out against the Federal Reserve.
Anonymous
Question; Where does one invest his life savings ? Out of the USA ?, -- If yes, What other country ?
Athan
We should run the thieves out of the building and make the buidling an entire monument dedicated to Ron Paul. The man who rallied Americans to defeat the Federal Reserve, Protect the Constitution, and restore America's founding republic!
Barbarossa
Please note obvious spike in DOW immediately after Bernanke's renomination as FED Chairman. Think maybe he had the FED pump a few billion into the stock market to bring the DOW up? After all, it would look really bad if it went DOWN following Obama's announcement!
ibid
a very good summary of the present situation and its roots.
you fail, however, to identify how the federal reserve fits hand in glove with those "not for profit" foundations and "think tanks" whose membership has been so prolific in their embedment in the government for the past seventy years, as well as academia, commerce, military, banking, investment, and media.
all roads lead to one man:
Rockefeller.
....grandson of a robber baron whose empire was dismantled by the government of a nation.
those at jeckyll island were very much on a grand mission of Fabian socialism.
dholsop
Joe Sixpack
RevokeTheFed dot com
March 2008WHEREAS, Article I, Section 8 of the Constitution of the United States of America authorizes Congress "To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures";
WHEREAS, on December 13th, 1913 the US Congress enacted the Federal Reserve System;
WHEREAS, the Federal Reserve System is considered an independent agency within the federal government, with oversight of Congress and containing appointed public officials on its board of directors;
WHEREAS, the Federal Reserve System Controls the Federal Reserve Note, the official currency of the great nation of the United States of America;
WHEREAS, there may be controversies regarding the legality and constitutionality of the Federal Reserve System, it is recognized that the said system has operated continuously as the central banking system of the United States since the inception of the Federal Reserve Act of 1913;
WHEREAS, the Constitution of the United States of America granted Congress the authority to create the current Federal Reserve System, it also does grant Congress the authority to modify or revoke the Federal Reserve System;
WHEREAS, the actions of the Fedreral Reserve System represent the credit and currency of the United Stated of America to the citizens of this great nation and to the world;
WHEREAS, the Federal Reserve System, acting independently within the federal government allowed, supported, and even promoted parasitical and non-productive uses of the money and credit of the United States of America;
WHEREAS, the United States and likely the entire world's financial system is undergoing massive de-leveraging of the said parasitical and non-productive uses of the credit and money of the United States of America (as well as other nations' currencies);
WHEREAS, the US dollar, the "Federal Reserve Note" is declining in value due to these parasitical activites, as well as potentially other causes;
WHEREAS, it is recognized that the citizens of the United States and other nations did willingly participate at some level in the creation and propogation of said parasitical activities;
WHEREAS, it is also recognized that the United States of America, a sovereign nation, has the legal, moral, and God given authority to take actions to benefit its citizens and to protect its good name, credit and money in times of difficulty;
WHEREAS, it is recognized that the current time is such a time of great difficulty;
WHEREAS, it is recognized the parasitical financial institutions and their activities are at odds with citizens of the United States of America and the good credit and money thereof;
WHEREAS, the current indications are that the Federal Reserve System is acting to preserve the financial system currently flooded with the parasitical activities;
WHEREAS, the current indications are that the neither the Federal Reserve System, nor the Congress of the United States, nor the people of the United States have access to the books of the institutions being preserved by the Federal Reserve, and therefor the degree of inter-connectivity and risk associated with the institutions and other entities cannot be determined;
WHEREAS, the Federal Reserve System is accepting non-performing assets as collateral for credit with ultimate taxpayer responibility to entities not under its legislative mandate;
IT MUST BE CONCLUDED, that the Federal Reserve System is not acting to the benefit of the people of the United States of America, its credit, money, and good name;
WHEREAS, it is recognized that the political will and capability of the government of the United States of America may not be up to the task of prosecuting this proclamation ; It is also recognized that this may be the only hope for the continued survival of the United States of America as the great nation as it has historically existed.
NOW THEREFORE, it is PROCLAIMED by those supporting this Proclamation that the Congress of the United States of America FULLY NATIONALIZE the Federal Reserve System, and take full control of the credit and money of our great nation; The Congress must take whatever action necessary to seperate out, sequester, disown, or otherwise neutralize the effect of the parasitical financial activities which led to the current crisis; The Congress of the United States of America must reorganize, replace, or terminate the Federal Reserve System as appropriate; or otherwise devise a system for creation of the national currency.
IT IS FURTHER PROCLAIMED, that the Congress of the United States of America in cooperation with the Executive of the United States of America contact allied nations and any other nation willing to participate in the overhaul of the failing and parastical financial sytem currently in operation and create new treaties and alliances as necessary to create a sane and productive system of finance with the express goal of supporting a productive national, and by extension and through voluntary cooperation, world economy;
FURTHERMORE, it is PROCLAIMED that it should be the goal of such an international effort to maintain fair international trading practices allowing for protection in national interest of labor, resources, and productive capabilities;
WHEREAS, it is recognized that such a move on the part of the United States of America may result in the necessity of an isolationist policy IF the other developed nations do not follow our lead; If such occurs, so be it.
SO HELP US GOD!Joe Sixpack
"Reserved Larry Summers"
You may have to delete that! Then again, the fat lady (congress) has not sung yet. ;)
Of course, so far congress sings Obama's tune.
Quinny
I was told once that in the original documents that created the Fed, there was a "buyout" clause whereby the US
Govt. could op-out of the agreement by paying off the Federal Reserve to the tune of $30 million dollars. Does
anyone have any info on this? Thanks to all and good luck....
Dr. Bombay
According to the Congressional record, the American public can "buyout the Fed" for the total amount
of...$450 million dollars. This is about $25 dollars each for every person in the USA. So...where do I send
my check??
kraut
Thanx Jim for referring to Germany as a "socialist" country - or did you mean "satelite state of the US" - or both? ;-)
After WW II West Germany was widely modeled after a western, US friendly democracy and back in 1990 West Germany absorbed socialist East Germany (not the other way round and the Easterners are still mad about it). American culture permeates the German way - the way we think, the way we eat and the way we perceive the media.
If you refer to Germany as a "socialist" country, you're looking into a mirror. But then again, that was your point?!
StuckInNJ
Mind blowingly good. As usual.
And so many excellent comments. This site has some really knowledgeable posters. I'm humbled.
I can't add anything new, except one thing.
First, robmu1, hit the nail on the head. "The biggest problem we have here is that only a fraction of a percentage point of Americans understand [or care] what/who the Fed is" . Robmu1 also said, "Another insidious problem ... that we will not be able to defeat: the entitlement mentality that rules in the U.S. today."
Those two reasons are why I think we're ultimately doomed. Unless ...
There is a REVOLUTION. It may, or may not, involve bullets. But, only a revolution, I sincerely believe, will change things. The "who cares" and "gimme gimme" attitude affecting the vast majority leaves no other way.
I would join it in a heartbeat. Just waiting for a leader to show me the way .....
------------------------------------------
PS: Love the CCR reference!!! I was 17 when I bought Green River. Best rock band of my era, hands down. For me.
Anonymous
I found this to be another well researched article. I admire your ability to draw material from a
variety of sources, including popular music when filling out your thesis.
The table about 2/3 of the way through the article (the one comparing 1970 to 2007 prices)
contains a very common mathematical error. The percentage increase in cost
is overstated by 100% for each category. For instance, the percentage increase of a movie
ticket which rose in cost from $1.50 to $7.00 is 367%, not 467%.
Anonymous
How can we return to a gold or silver standard when the USA is already bankrupt? What would we use to purchase the gold and silver needed to back our currency?
limitup
...ever heard of a gun?
PhillyWalt
I was driving north on I 95 coming home from our family vacation in South Carolina and saw a sign for the exit for Dillon SC and another sign below it which read "Ben Bernanke Interchange" I thought this to be so surreal that I had to look over in the southbound lane on the other side of the highway and sure enough there was one on the southbound side as well. I looked around for a helicopter pad but they didn't have one there, yet. I had a lot of time to think about it on my ride home to Philly and the only conclusion that I could come up with is that it must be the stimulus money at work honoring people who are destroying our economy by erecting roadsigns in their honor. To confirm that what I saw was real I did a google search when I got home and found this:
http://money.cnn.com/2009/03/07/news/newsmakers/bernanke_interchange/index.htm?postversion=2009030909
Lasiter
CONGRESSMAN RON PAUL NOTE:
A question to ask is just why does Ron Paul acknowledge and publicly comment on G. Edward Griffin's book, Creature from Jekyll Island? This book was published in 1994 and is a direct plagiarization of Eustace Mullin's Secrets of the Federal Reserve, published in 1952 yet barely a mention of Eustace is made in this spin edition of Eustace's original work.
Another point, Edward Griffin's was sponsored by the John Birch Society where he gave many talks about his book when it was published. The John Birch Society was funded into existence by Nelson Rockefeller, an owner of the Federal Reserve Bank, Inc?
see... http://www.rense.com/general39/EUSTACE.htm
So the question of Ron Paul arises when he makes no mention on the true source of the the information on the organization he supposedly wants to abolish, yet embraces an author and book produced (in)directly by the efforts of the Rockefeller clan.
Is Ron Paul's function to distract and give hope while the NWO is installed? Seems to me to be that way.
It took me a while to digest this point myself when Eustace first mentioned it to me..
Lasiter
Foreword [SECRETS OF THE FEDERAL RESERVE By Eustace Mullins
In 1949, while I was visiting Ezra Pound who was a political prisoner at St. Elizabeth’s Hospital, Washington, D.C. (a Federal institution for the insane), Dr. Pound asked me if I had ever heard of the Federal Reserve System. I replied that I had not, as of the age of 25. He then showed me a ten dollar bill marked "Federal Reserve Note" and asked me if I would do some research at the Library of Congress on the Federal Reserve System which had issued this bill. Pound was unable to go to the Library himself, as he was being held without trial as a political prisoner by the United States government. After he was denied broadcasting time in the U.S., Dr. Pound broadcast from Italy in an effort to persuade people of the United States not to enter World War II. Franklin D. Roosevelt had personally ordered Pound’s indictment, spurred by the demands of his three personal assistants, Harry Dexter White, Lauchlin Currie, and Alger Hiss, all of whom were subsequently identified as being connected with Communist espionage.
I had no interest in money or banking as a subject, because I was working on a novel. Pound offered to supplement my income by ten dollars a week for a few weeks. My initial research revealed evidence of an international banking group which had secretly planned the writing of the Federal Reserve Act and Congress’ enactment of the plan into law. These findings confirmed what Pound had long suspected. He said, "You must work on it as a detective story." I was fortunate in having my research at the Library of Congress directed by a prominent scholar, George Stimpson, founder of the National Press Club, who was described by The New York Times of September 28, 1952: "Beloved by Washington newspapermen as ‘our walking Library of Congress’, Mr. Stimpson was a highly regarded reference source in the Capitol. Government officials, Congressmen and reporters went to him for information on any subject."
I did research four hours each day at the Library of Congress, and went to St. Elizabeth’s Hospital in the afternoon. Pound and I went over the previous day’s notes. I then had dinner with George Stimpson at Scholl’s Cafeteria while he went over my material, and I then went back to my room to type up the corrected notes. Both Stimpson and Pound made many suggestions in guiding me in a field in which I had no previous experience. When Pound’s resources ran low, I applied to the Guggenheim Foundation, Huntington Hartford Foundation, and other foundations to complete my research on the Federal Reserve. Even though my foundation applications were sponsored by the three leading poets of America, Ezra Pound, E.E. Cummings, and Elizabeth Bishop, all of the foundations refused to sponsor this research. I then wrote up my findings to date, and in 1950 began efforts to market this manuscript in New York. Eighteen publishers turned it down without comment, but the nineteenth, Devin Garrity, president of Devin Adair Publishing Company, gave me some friendly advice in his office. "I like your book, but we can’t print it," he told me. "Neither can anybody else in New York. Why don’t you bring in a prospectus for your novel, and I think we can give you an advance. You may as well forget about getting the Federal Reserve book published. I doubt if it could ever be printed."
This was devastating news, coming after two years of intensive work. I reported back to Pound, and we tried to find a publisher in other parts of the country. After two years of fruitless submissions, the book was published in a small edition in 1952 by two of Pound’s disciples, John Kasper and David Horton, using their private funds, under the title Mullins on the Federal Reserve. In 1954, a second edition, with unauthorized alterations, was published in New Jersey, as The Federal Reserve Conspiracy. In 1955, Guido Roeder brought out a German edition in Oberammergau, Germany. The book was seized and the entire edition of 10,000 copies burned by government agents led by Dr. Otto John.
The burning of the book was upheld April 21, 1961 by judge Israel Katz of the Bavarian Supreme Court. The U.S. Government refused to intervene, because U.S. High Commissioner to Germany, James B. Conant (president of Harvard University 1933 to 1953), had approved the initial book burning order. This is the only book which has been burned in Germany since World War II. In 1968 a pirated edition of this book appeared in California. Both the FBI and the U.S. Postal inspectors refused to act, despite numerous complaints from me during the next decade. In 1980 a new German edition appeared. Because the U.S. Government apparently no longer dictated the internal affairs of Germany, the identical book which had been burned in 1955 now circulates in Germany without interference.
I had collaborated on several books with Mr. H.L. Hunt and he suggested that I should continue my long-delayed research on the Federal Reserve and bring out a more definitive version of this book. I had just signed a contract to write the authorized biography of Ezra Pound, and the Federal Reserve book had to be postponed. Mr. Hunt passed away before I could get back to my research, and once again I faced the problem of financing research for the book.
My original book had traced and named the shadowy figures in the United States who planned the Federal Reserve Act. I now discovered that the men whom I exposed in 1952 as the shadowy figures behind the operation of the Federal Reserve System were themselves shadows, the American fronts for the unknown figures who became known as the "London Connection." I found that notwithstanding our successes in the Wars of Independence of 1812 against England, we remained an economic and financial colony of Great Britain. For the first time, we located the original stockholders of the Federal Reserve Banks and traced their parent companies to the London Connection.
This research is substantiated by citations and documentation from hundreds of newspapers, periodicals and books and charts showing blood, marriage, and business relationships. More than a thousand issues of The New York Times on microfilm have been checked not only for original information, but verification of statements from other sources.
It is a truism of the writing profession that a writer has only one book within him. This seems applicable in my case, because I am now in the fifth decade of continuous writing on a single subject, the inside story of the Federal Reserve System. This book was from its inception commissioned and guided by Ezra Pound. Four of his protégés have previously been awarded the Nobel Prize for Literature, William Butler Yeats for his later poetry, James Joyce for "Ulysses", Ernest Hemingway for "The Sun Also Rises", and T.S. Elliot for "The Waste Land". Pound played a major role in the inspiration and in the editing of these works--which leads us to believe that this present work, also inspired by Pound, represents an ongoing literary tradition.
Although this book in its inception was expected to be a tortuous work on economic and monetary techniques, it soon developed into a story of such universal and dramatic appeal that from the outset, Ezra Pound urged me to write it as a detective story, a genre which was invented by my fellow Virginian, Edgar Allan Poe. I believe that the continuous circulation of this book during the past forty years has not only exonerated Ezra Pound for his much condemned political and monetary statements, but also that it has been, and will continue to be, the ultimate weapon against the powerful conspirators who compelled him to serve thirteen and a half years without trial, as a political prisoner held in an insane asylum a la KGB. His earliest vindication came when the government agents who represented the conspirators refused to allow him to testify in his own defense; the second vindication came in 1958 when these same agents dropped all charges against him, and he walked out of St. Elizabeth’s Hospital, a free man once more. His third and final vindication is this work, which documents every aspect of his exposure of the ruthless international financiers to whom Ezra Pound became but one more victim, doomed to serve years as the Man in the Iron Mask, because he had dared to alert his fellow-Americans to their furtive acts of treason against all people of the United States.
In my lectures throughout this nation, and in my appearances on many radio and television programs, I have sounded the toxin that the Federal Reserve System is not Federal; it has no reserves; and it is not a system at all, but rather, a criminal syndicate. From November, 1910, when the conspirators met on Jekyll Island, Georgia, to the present time, the machinations of the Federal Reserve bankers have been shrouded in secrecy. Today, that secrecy has cost the American people a three trillion dollar debt, with annual interest payments to these bankers amounting to some three hundred billion dollars per year, sums which stagger the imagination, and which in themselves are ultimately unpayable. Officials of the Federal Reserve System routinely issue remonstrances to the public, much as the Hindu fakir pipes an insistent tune to the dazed cobra which sways its head before him, not to resolve the situation, but to prevent it from striking him. Such was the soothing letter written by Donald J. Winn, Assistant to the Board of Governors in response to an inquiry by a Congressman, the Honorable Norman D. Shumway, on March 10, 1983. Mr. Winn states that "The Federal Reserve System was established by an act of Congress in 1913 and is not a ‘private corporation’." On the next page, Mr. Winn continues, "The stock of the Federal Reserve Banks is held entirely by commercial banks that are members of the Federal Reserve System." He offers no explanation as to why the government has never owned a single share of stock in any Federal Reserve Bank, or why the Federal Reserve System is not a "private corporation" when all of its stock is owned by "private corporations".
American history in the twentieth century has recorded the amazing achievements of the Federal Reserve bankers. First, the outbreak of World War I, which was made possible by the funds available from the new central bank of the United States. Second, the Agricultural Depression of 1920. Third, the Black Friday Crash on Wall Street of October, 1929 and the ensuing Great Depression. Fourth, World War II. Fifth, the conversion of the assets of the United States and its citizens from real property to paper assets from 1945 to the present, transforming a victorious America and foremost world power in 1945 to the world’s largest debtor nation in 1990. Today, this nation lies in economic ruins, devastated and destitute, in much the same dire straits in which Germany and Japan found themselves in 1945. Will Americans act to rebuild our nation, as Germany and Japan have done when they faced the identical conditions which we now face--or will we continue to be enslaved by the Babylonian debt money system which was set up by the Federal Reserve Act in 1913 to complete our total destruction? This is the only question which we have to answer, and we do not have much time left to answer it.
Because of the depth and the importance of the information which I had developed at the Library of Congress under the tutelage of Ezra Pound, this work became the happy hunting ground for many other would-be historians, who were unable to research this material for themselves. Over the past four decades, I have become accustomed to seeing this material appear in many other books, invariably attributed to other writers, with my name never mentioned. To add insult to injury, not only my material, but even my title has been appropriated, in a massive, if obtuse, work called "Secrets of the Temple--the Federal Reserve". This heavily advertised book received reviews ranging from incredulous to hilarious. Forbes Magazine advised its readers to read their review and save their money, pointing out that "a reader will discover no secrets" and that "This is one of those books whose fanfares far exceed their merit." This was not accidental, as this overblown whitewash of the Federal Reserve bankers was published by the most famous nonbook publisher in the world.
After my initial shock at discovering that the most influential literary personality of the twentieth century, Ezra Pound, was imprisoned in "the Hellhole" in Washington, I immediately wrote for assistance to a Wall Street financier at whose estate I had frequently been a guest. I reminded him that as a patron of the arts, he could not afford to allow Pound to remain in such inhuman captivity. His reply shocked me even more. He wrote back that "your friend can well stay where he is." It was some years before I was able to understand that, for this investment banker and his colleagues, Ezra Pound would always be "the enemy".
EustaceMullins
Jackson Hole, Wyoming
1991
Introduction [SECRETS OF THE FEDERAL RESERVE By Eustace Mullins]
Here are the simple facts of the great betrayal. Wilson and House knew that they were doing something momentous. One cannot fathom men’s motives and this pair probably believed in what they were up to. What they did not believe in was representative government. They believed in government by an uncontrolled oligarchy whose acts would only become apparent after an interval so long that the electorate would be forever incapable of doing anything efficient to remedy depredations.
EZRA POUND
(St. Elizabeth’s Hospital, Washington, D.C. 1950)
(AUTHOR’S NOTE: Dr. Pound wrote this introduction for the earliest version of this book, published by Kasper and Horton, New York, 1952. Because he was being held as a political prisoner without trial by the Federal Government, he could not afford to allow his name to appear on the book because of additional reprisals against him. Neither could he allow the book to be dedicated to him, although he had commissioned its writing. The author is gratified to be able to remedy these necessary omissions, thirty-three years after the events.)
JEFFERSON’S OPINION ON THE CONSTITUTIONALITY OF THE BANK
February 15, 1791
(The Writings of Thomas Jefferson, ed. by H. E. Bergh, Vol. III, p. 145 ff.)
The bill for establishing a national bank, in 1791, undertakes, among other things,--
1. To form the subscribers into a corporation.
2. To enable them, in their corporate capacities, to receive grants of lands; and, so far, is against the laws of mortmain.
3. To make alien subscribers capable of holding lands; and so far is against the laws of alienage.
4. To transmit these lands, on the death of a proprietor, to a certain line of successors; and so far, changes the course of descents.
5. To put the lands out of the reach of forfeiture, or escheat; and so far, is against the laws of forfeiture and escheat.
6. To transmit personal chattels to successors, in a certain line; and so far, is against the laws of distribution.
7. To give them the sole and exclusive right of banking, under the national authority; and, so far, is against the laws of monopoly.
8. To communicate to them a power to make laws, paramount to the laws of the states; for so they must be construed, to protect the institution from the control of the state legislatures; and so probably they will be construed.
I consider the foundation of the Constitution as laid on this ground--that all powers not delegated to the United States, by the Constitution, nor prohibited by it to the states, are reserved to the states, or to the people (12th amend.). To take a single step beyond the boundaries thus specially drawn around the powers of Congress, is to take possession of a boundless field of power, no longer susceptible of any definition.
The incorporation of a bank, and the powers assumed by this bill, have not, in my opinion, been delegated to the United States by the Constitution.
The Book: http://whale.to/b/mullins5.html
Anonymous
The way to kill the Federal Reserve is for the people who read this article to take money from the bank and to buy gold and silver with it as well as other real items of consumption. Only keep in the bank what you need for bills. The other thing that must be done is to get out of debt.
Profit must be earned by success, not by who you know or by deceit as is the case on Wall Street. When someone fails, they should pay a cost in lost resources and to a degree some loss of credibility due to the nature of their failure. Wall Street and Washington constantly put the same failed policies and people back in place after they fail. The reason they can do this is that money is created by indebtedness. Any fool can make a promise to pay and that is sufficient for the Federal Reserve to create money against. If gold and silver were money, that practice would end and the govt couldn't put the same failures back in charge unless they could raise money for it.
Individually the steps are to get out of debt, reduce bank accounts and buy gold and silver.