Federal Reserve System
The stated purpose of the Federal Reserve (FED) is to control inflation and to stabilize the economy. In this, they have been a total failure. They have actually increased inflation and worsened recessions by printing money out of thin air. Their real, and unstated, mission is to protect large banks and to pass their losses onto the taxpayers.
First, it is important to note that only Congress has the power to coin money. Article I, Section 8, Clause 5 of the Constitution grants Congress the power “To coin money, regulate the value thereof…” In Section 10 the Constitution states “No State shall … coin money, emit bills of credit, make anything but gold and silver coin a tender in payment of debts …” To coin money means to mint coins which are made of gold or silver – not paper money.
In Hepburn v. Griswold the Supreme Court ruled, in reference to the greenbacks printed by the United States to finance the civil war:
“Most unquestionably there is no legal tender and there can be no legal tender in this country under the authority of this government of anything but gold and silver, either the coinage of our mints or foreign coins at rates regulated by Congress. This is a constitutional principle and of the very highest importance … Congress has no power to substitute paper or anything else for a coin as tender in payment of debts.” [Emphases added]
One year later, after two new justices were added to the Court, this decision was reversed and the Court ruled that Congress could print money during times of war. In 1884 the Court ruled in Juilliard v. Greenman that Congress could print fiat money even in peacetime stating that “… making the notes of the United States a legal tender in payment of private debts … “ is “… included in the power to borrow money and to provide a national currency.” However, fiat currency is not debt!
The Federal Reserve is a private banking cartel sanctioned by the Federal government. No one knows who actually owns the FED. We cannot audit the FED and there is no accountability. They even refuse to allow Congress to look at the gold that is supposedly stored in Fort Knox. The founders of the FED represented 25% of the worlds wealth. They met in secret on Jekyll Island, Georgia with the following goals:
1. To stop the growing competition from regional banks
2. To obtain a government franchise to print money
3. To get control of all bank reserves
4. To shift bank losses to the taxpayers (sound familiar?)
The law that created the Federal Reserve in 1913 was actually written by the bankers who represented 25% of the world’s wealth at the time. They sold this bill to the public by stating that the FED would stabilize the banking industry and eliminate the booms and busts in the economy. In this, they have been a complete failure. [Read The Creature from Jekyll Island by G. Edward Griffin.]
From the founding of the Federal Reserve in 1913 it has presided over the crashes of 1921, 1929 and the recessions of 1953, 1957, 1969, 1975, 1981, the “Black Monday” crash in 1987 and the virtual collapse of the economy in 2008. This is in addition to the great depression which began in 1929.
From 1913 to 1990 the value of the dollar has dropped 90%. In other words, it would take $10,000 in todays money to purchase the same amount of goods with $1,000 in 1913. When you take into account income taxes, which did not exist in 1913, you would have needed $20,000 of income in 1990 to equate to the $1,000 of 1913.
Most of this has been the result in the inflation of the money supply. This money was created out of thin air. When the money supply expands too fast it creates booms. When the money supply contracts it creates busts. This has been the primary cause of our economic recessions. The expansion of the money supply has been the primary cause of inflation. In reality, it is not inflation, but the decrease in the purchasing power of the dollar. This inflation is a hidden tax on the citizens that is used to fund the government in lieu of raising taxes.
And, while the Federal Reserve was inflating the money supply they were protecting the large banks and shifting their losses onto the taxpayers. Virtually every time that a large bank was about to suffer large loan defaults (read losses to stockholders) they were allowed to roll over these loans into larger loans so that the borrowers could continue making the interest payments (read profits) to the banks. When this policy eventually failed, the FED got Congress (read the taxpayer) to bail out the banks under the guise that their failure would hurt the taxpayers.
In addition, Congress does not have the power to abdicate its essential legislative functions vested to it by the Constitution to others. This was decided in 1935 by the Supreme Court in A.L.A. Schechter Poultry Corp v. United States. Therefore, Congress did not have the power to delegate the printing of money to the Federal Reserve.
Because the bankers profit wildly from financing both sides in wars they maneuvered behind the scenes to ensure that there are many wars. One of the primary reasons we got into WWI and WWII was to protect the bank loans to Allied countries. Had Germany won the war, the Allied countries would have defaulted on their loans and bankrupted the banks.
Now, the FED is printing $85 billion each month (over $1 trillion per year) to purchase federal government debt. It appears to me that this is 100% profit to the FED because it is printing money out of thin air which is then used to purchase government debt. (If you were to counterfeit money and then use it to invest in the stock market it would be total profit to you!) It is doing this because the federal government cannot find enough suckers to buy its ever increasing debt.
Now, the banking system is in league with the credit card and credit rating agencies to keep everyone in debt. The FED keeps interest rates so low that it makes no sense to save money. The other side is that the low rates encourage people to borrow. This benefits the banks and the credit card companies. The credit rating agencies actually penalize individuals for tearing up their credit cards and paying down their debts. When they reduce their debt the credit rating agencies penalize them by reducing their credit scores and thus making future borrowing more expensive. This is pure collusion between the banks, the credit card companies and the credit rating agencies.