The Federal Reserve

Article I, Section 8, Clause 5, of the United States Constitution provides that Congress shall have the power to coin money and regulate the value thereof and of any foreign coins. But that is not the case. The United States government has no power to issue money, control the flow of money, or to even distribute it - that belongs to a private corporation registered in the State of Delaware - the Federal Reserve Bank.

Read these Articles about the Federal Reserve Bank:

• Outing the Constitutional Criminals
• How the Federal Reserve Runs the US - Part 1
• How the Federal Reserve Runs the US - Part 2
• How the Federal Reserve Runs the US - Part 3
• How the Federal Reserve Runs the US - Part 4
• How the Federal Reserve Runs the US - Part 5
• We're Going to Have to Break the Bank
• The Fed: Jekyll Island Monster
• Paper Money and Tyranny

Outing the Constitutional Criminals
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by Stephen Neitzke

An Analysis and Review of Aaron Russo's Film, America: Freedom to Fascism

© 2006 Stephen Neitzke

How the Federal Reserve Runs the US
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by Stephen Lendman

Years ago I read William Greider's excellent book published in 1987 on how the US Federal Reserve System works.  It was detailed and explicit and makes wonderful and informative reading, except for the solution he suggests to a huge problem.  His was far too timid.  This article proposes a much different one.  Greider called his book Secrets of the Temple with a sub-title: How the Federal Reserve Runs the Country.  A better sub-title might have been how the Fed (and other key central bankers) runs the world.  This article attempts to summarize what it does, how it does it, for whose benefit and at whose expense.  For those who don't know, prepare for some stunning information and commentary.

Let's be clear at the outset.  The US Federal Reserve, Bank of England, Bank of Japan and the European Central Bank (for the 12 European countries that adopted the single euro currency in 1999) are institutions with enormous power far beyond what most people everywhere can imagine.  These most dominant of all central banks, as well as most others, have a powerful influence on the financial conditions in virtually all countries including their own, of course, in an increasingly borderless financial world where a significant economic event in one nation can affect most others for better or worse.

One other powerful bank is also part of today's financial world.  It needs mentioning because of its importance, even though it requires a separate article to explain how it works more fully.  It's the secretive, inviolable and accountable to no one Bank of International Settlements (BIS) founded in 1930 and based in Basle, Switzerland.  This bank most people never heard of is the central banker to its member central banks - a sort of banking "boss of bosses" equivalent to what apparently exists in the shadowy world of Mafia dons.  Like most other central banks, including the Federal Reserve (explained below), it's privately owned by its members. 

It's believed by some academicians and others who've studied the BIS that the ruling elite of financial capitalism established this bank of banks to be the apex of power to exercise authority over a world financial system owned and controlled by them.  It's thought their plan was to use this bank to dominate the political system of every country and control the world economy in a feudalistic fashion.  In a word, the thinking goes that these super-elite want to rule the world by controlling its money, and they set up this supranational all-powerful bank of banks to do it.  As important as that is, that discussion remains for another time as the intent of this article is to focus solely on the US Federal Reserve.

The dominant central banks and BIS, together with most others, wield their influence in cartel-like alliance with each other to assure they all benefit more than they otherwise would without such a cozy arrangement.  With their immense power it's no play on words to say these financial institutions do indeed rule the world.  Because they're able to create money, they fund the needs of their governments, their militaries and all business activity that couldn't function without a ready supply of that most needed of all commodities.  It's money, not love, that makes the world go round, and central bankers have the power to create or remove from circulation as much or little of it as they choose and for whatever purpose they have in mind.  That kind of power can move mountains or destroy them.

No nation's central bank is more powerful today than the US Federal Reserve, but it wasn't always that way, and it now has competition for the top spot it hasn't known since WW II.  The Fed, as it's called, has existed since it was first established by an act of Congress in 1913.  But the Bank of England has been around since Britannia ruled the waves beginning in 1694 when King William III needed help funding the kind of escapade that takes lots of ready cash - war.  Back then it was with France, and the king needed a friendly banker to print it up for him to help him fight it.  He also needed financial help to facilitate trade and manage the country's debt that always mounts up when wars are fought.  The Bank of England wasn't the first central bank, but it was the modern world's first privately owned one in a powerful country.  It was called the Bank of England to keep the public from knowing that it, like our Federal Reserve, was and still is privately owned and not part of the government.  It was also the model used in the formation of our own central bank and most others.

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The Brits may have had a 219 year head start on the Fed, but central bankers are only as powerful as the countries they represent and their economies.  Today the former dominant Brits must settle for a far lesser role as being just one of many junior partners to a US hegemon that emerged post WW II as the world's dominant economic power.  It still is today, even though some credible experts believe this country may have seen and past its peak and is now in decline.  Some go further and claim our decline has been accelerated by the disastrous policies of the Bush administration that irrationally believes waging war on the world without end is the way to rule it, promote endless economic growth and dominance, and thus preserve the nation's preeminent position as the reigning economic champion. 

It's easy to challenge that view and think that champ has climbed into the ring a few times too many, has endless plans for more return engagements, and is likely to meet the same fate many a former human one did who didn't know when to quit and ended up with chronic brain damage known as dementia. The lesson from history is always the same. The price for reckless behavior is high, painful and inevitable.  It's true for countries as well as individuals, but too often neither one sees it until it's too late.  The biggest difference between the US today and other nations in the past that paid dearly for not yielding when their day had passed is that we have an all-powerful arsenal others never did.  Should we decide to use it, there likely wouldn't be much left behind for a successor.  Not a pleasant thought, but a very real one.

It All Began in 1910 On Jekll Island

It sounds like the title of a horror movie, but the real life events that happened at this privately owned island off the coast of Georgia in 1910 would have challenged even the Hollywood bad dream factory to come up with.

It was here that seven very rich and powerful men met in secret for nine days and created the Federal Reserve System that came into being three years later on December 23, 1913 by an act of Congress.  Since that time, the nation and world would never be the same, but only the rich and powerful were the beneficiaries.  That was the whole idea, and it worked as planned.

The Federal Reserve Act that began it all must surely rank as one of the most disastrous and outrageous pieces of legislation to the public welfare ever to come out of any legislative body.  It may have also have been and still is illegal according to Article 1, Section 8 of the Constitution which happens to be the inviolable law of the land.  The article states that Congress shall have the power to coin (create) money and regulate the value thereof.  In 1935, the US Supreme Court ruled the Congress cannot constitutionally delegate its power to another group or body.  The Congress thus acted in violation of the Constitution it's sworn to uphold and in so doing created the Federal Reserve System that, as will be explained below, is a private for-profit corporation operating at the expense of the public welfare.  By its action, our lawmakers committed fraud against the people of the country and so far have gotten away with it without the public even knowing about the harm done.

The shameful result is that what should have arrived stillborn is now the most dominant institution on earth, and all because of what began on a privately owned island with a scary name.  But had the Congress acted responsibly, the act of Fed creation might never have happened.  The legislation establishing it was so harmful to the public interest, it likely never would have  passed if it hadn't been shepherded through a carefully prepared Congressional Conference Committee meeting scheduled for between 1:30 - 4:30 AM (when most members of Congress were asleep) on December 22, 1913.  The Act was then voted on the next day and passed although many members of the body had left for the Christmas holidays and most others who stayed behind hadn't had time to read it or know its contents.  Sound familiar?  Still it passed (like a thief in the night) and was signed into law by an unwitting or complicit Woodrow Wilson who later admitted he made a terrible mistake saying "I unwittingly ruined my country."  But it was too late for postmortems, and the American people have paid dearly ever since.  It's about time the public understood that and began to demand an end to over 90 years of damage done.

Stephen Lendman [send him email] lives in Chicago, and maintains a blog at http://sjlendman.blogspot.com

How the Federal Reserve Runs the US - Part II
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by Stephen Lendman

It almost happened 43 years ago when one president decided to act on behalf of the people who elected him. That man was John Kennedy, who before his death planned to end the Federal Reserve System to eliminate the national debt a central bank creates by printing money and loaning it to the government.  That debt has now risen to over $8,400,000,000,000 ($8.4 trillion) which every taxpayer must pay for and has done so in the amount of nearly $174,000,000,000 ($174 billion) in just the first three months of 2006.  This debt service is now an annualized amount exceeding two-thirds of a trillion dollars.  It's made the bankers rich (which was the whole idea) and the public poorer because we're taxed to pay the tab.  It's no exaggeration to call this the greatest financial scam in world history and one that gets greater every day.

The debt was less onerous 40 years ago, but Kennedy understood its danger to the country and the burden it placed on the public.  Thus, on June 4, 1963, he issued presidential order EO 11110 giving the president authority to issue currency.  He then ordered the US Treasury to print over $4 billion worth of "United States Notes" to replace Federal Reserve Notes.  He intended to replace them all when enough of the new currency was in circulation so he could end the Federal Reserve System and the control it gave the international bankers over the US government and the public.  Just months after the Kennedy plan went into effect, he was assassinated in Dallas in what was surely a coup d'etat disguised to look otherwise and may well have been carried out at least in part to save the Fed System and concentration of power it created that was so profitable for the powerful bankers in the country.  Those benefitting from it had good reason to be involved in the plot to save the special privilege they weren't willing to give up without a fight.  It's a plausible explanation that may explain who may have been behind the assassination and for what reason.  Whatever the truth is, the banking cartel was only in distress a short time.  Once Lyndon Johnson took office, he rescinded Kennedy's presidential order and restored the cartel's former power.  It's kept it ever since and is now, of course, more powerful than ever.  Even presidents are unable to stop it and those who would try have a lesson from history to give them pause.

The predecessors of the possible Kennedy coup plotters were the men who met on Jekyll Island in 1910. They represented some of the richest and most powerful men in the world - the Morgans, Rockefellers, Rothschilds of Europe (who dominated all European banking by the mid-1800s and became and still may be the wealthiest and most powerful family of all) and others of great influence and power.  Included was a US senator, a high ranking Treasury official, the president of the largest bank in the country at the time, a leading Wall Street figure and the man who would later become the first chairman of the Federal Reserve System.  It was quite an assemblage, and they came to accomplish one thing.  They wanted to change the ideology and course of American business that up to then was based on marketplace competition and replace it with monopoly.  They also knew what Baron M.A. Rothschild understood when he once said: "Give me control over a nation's currency and I care not who makes its laws."  They knew the wisdom of what's stated in Proverbs 22:7 as well: "The rich rule over the poor, and the borrower is servant to the lender."

This was the dawning of the age of powerful cartels when the seven financial titans meeting secretly in the island's clubhouse decided no longer to compete with each other and wanted the power to arrange it. They were already colluding informally but knew it would all work better under a legally sanctioned cartel.  They wanted a banking cartel and got one that flourishes today below the public radar with the tool they wanted most - the ability to control the nation's money supply that gave them almost unlimited power.  The cartel now works cooperatively with their governments and all other powerful transnational corporations in a dominant global alliance that allows them to control the world's markets, resources, cheap labor and our lives.

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The Federal Reserve System Is Not A Government Agency - It's A Privately Owned Cartel of Powerful Banks Protected By Law

It's commonly but falsely believed the Federal Reserve System is a function of government and subject to its control.  False.  It's often referred to as a quasi-governmental, decentralized central bank, but that's just cover to disguise what, in fact, it really is: a privately held and operated cartel made to look like the government is in charge.  The fact that it's headquartered in Washington in the formidable and impressive-looking Eccles building (named after a former Fed chairman) is just part of the clever subterfuge.  Here's how it works:

The Fed is composed of a Board of Governors in Washington and 12 regional banks in major cities throughout the country (including in my own city of Chicago where anyone once but no longer could walk up to a teller's window and buy US Treasury securities).  The system also includes many and various member banks including all national banks that are required to be part of the system.  Other banks were also allowed to join and many did.  The Federal Reserve began operating in November, 1914, almost one year after the Congressional act creating the system the previous year as explained above.  It was mandated by law to have the greatest power of any institution in the country - the power to create and control the nation's money supply. 

Most people know little or nothing about money and banking, likely never think about it, and have no idea how what the Fed and bankers do affect their lives.  Before writing this article, I had little more than the modest knowledge I learned in a required course on the subject and basic accounting as part of my MBA curriculum 46 years ago.  Those courses left out the most important parts of the story and never hinted at anything sinister about how the banking system works in fact.  But no one should ever imagine banks were established or intended to be run for our benefit.  They surely are not, and anyone suggesting they are should read on.  They're about as beneficial to the public welfare as was the MX Peacekeeper ICBM (the clever language is impressive) intended to carry nuclear warheads back in the mid-80s that had the power to destroy all life on the planet and one day may do it in its old or updated form.

The Federal Reserve Act of 1913 (the law of the land) stipulates that the Federal Reserve Banks of each region are owned by the member banks in it.  These Fed banks are privately owned corporations that make a great effort to hide the fact that they, in fact, own what the public largely thinks is part of the public treasury and government.  It's easy to think that as Fed chairmen and seven of the twelve Governors are appointed by the President and approved by the Senate.  As such, the FRB is a sort of quasi-government entity, but the fact is the System is a privately owned for profit enterprise just like any other business.  It has stockholders like other public corporations that are paid 6% risk free interest every year on their equity holdings.  The public doesn't know this, and it likely wouldn't be good PR if it found out.  People might be even more upset if they learned some of the owners of our Federal Reserve are powerful foreign investors in the UK, France, Germany, The Netherlands and Italy.  They're partners with giant US banks like JP Morgan Chase and Citibank as well as  powerful Wall Street firms like Goldman Sachs in a new world order banking cartel that influences and affects business activity everywhere and our lives.

The issue of private ownership of the Federal Reserve Banks has been challenged several times in the federal courts to no avail.  Each time the courts upheld the current system under which each Federal Reserve Bank is a separate corporation owned by commercial banks in its region. One such case was Lewis v. United States that was decided by the 9th Circuit Court of Appeals that ruled the Reserve Banks are independent, privately owned and locally controlled corporations.

Stephen Lendman [send him email] lives in Chicago, and maintains a blog at http://sjlendman.blogspot.com

How the Federal Reserve Runs the US - Part III
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by Stephen Lendman

Our Founding Fathers Had Different Ideas Than the Powerful Men who Met on Jekll Island

Throughout our history, there was disagreement over who should control the power of the nation's money supply and the right to issue it.  The Founding Fathers understood that the British Parliament was forced to levy unfair taxes on its American colonies and its own citizens because the Bank of England had run up so much debt the government needed revenue to reduce it.  Benjamin Franklin, in fact, believed that was the real cause of the American Revolution.  Most of the Founders also understood the danger that could result from bankers' accumulating too much wealth and power.  James Madison, the main drafter of our Constitution, called them "Money Changers," referring to the Bible that said Jesus twice drove the Money Changers from the Temple in Jerusalem 2,000 years ago.  Madison said:

"History records that the Money Changers have used every form of abuse, intrigue, deceit and violent means possible to maintain their control over governments by controlling money and its issuance."

Thomas Jefferson was just as strong in his condemnation when he said:

"I sincerely believe that banking institutions are more dangerous to our liberties than standing armies.  Already they have raised up a money aristocracy that has set the government at defiance.  The issuing power should be taken from the banks and restored to the people to whom it properly belongs."

Jefferson and Madison understood the dangers of commercial monopolies of all types and tried to assure they never would exist in the new nation.  They, in fact, wanted two additional amendments added to the "Bill of Rights" in the Constitution but never got them.  They believed to protect the liberty of the people the nation should have "freedom from monopolies in commerce" (what are now giant corporations including the big international banks and Wall Street investment firms) and "freedom from a permanent military," or standing armies.  Try to imagine what the country would be like today if Jefferson and Madison had gotten their way - a country without giant predatory corporations exploiting everyone for profit and without a rampaging military waging war on the world, threatening to destroy it, and doing it so those corporate giants could earn even greater profits.

They never did, of course, and the people have paid dearly ever since including the great harm caused because the government relinquished its right to control the nation's money supply.  It gave it away secretly with the public none the wiser, never knowing how greatly it's been harmed.  It's been even worse since the 1980s because the power of the Fed grew under a friendly Republican president, and the corporate media led cheerleading for it hid the effect.  For them, no public demeaning of it, its giant member banks or Wall Street allies is allowed. 

Things were especially out of hand during the tenure of Alan Greenspan - a Fed chairman no one should have found much reason to cheer either before he headed the Fed when he was a presidential advisor or during the time he did.  It was only after his economic consulting firm failed that he went into government service likely because he needed a new line of work.  There he managed to become a larger than life seer of central banking who was elevated to near sainthood by the business pundits who thought under his tenure the skies were only blue and the few clouds in sight always had silver linings.  Now Alan is retired to the greener pastures of lucrative book contracts and speaking engagements, which shows when you do your job well for the rich and powerful (at the expense of the rest of us) who gave it to you, you'll be well rewarded in the end.  It's likely the new Fed chairman has taken note and will dutifully try to follow in the tradition that preceded him. 

But try imagining a different sort of Fed chairman, one who knew, believed in and practiced the words and wisdom of another American president of some note - Abraham Lincoln.  In 1862 Lincoln said the following: "The money powers prey upon the nation in times of peace and conspire against it in times of adversity.  It is more despotic than a monarch, more insolent than autocracy and more selfish than a bureaucracy. It denounces, as public enemies, all who question its methods or throw light upon its crimes.  I have two great enemies, the Southern Army in front of me and the bankers in the rear.  Of the two, the one at the rear is my greatest foe."

Lincoln also appears to have said (although some dispute it): "I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country.....corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed."  Imagine what Lincoln might say today.

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Given Lincoln's sentiment about the bankers and money power of the country, it would seem to beg the obvious question: did it play a role in, or was it the reason for, his untimely death at the hands of John Wilkes Booth?  The international bankers clearly disliked Lincoln after he managed to get the Congress to pass the Legal Tender Act in 1862 that empowered the US Treasury to issue paper money called "greenbacks."  Lincoln needed this legislation after he declined to pay the bankers the usurious 24 - 36% interest rates they demanded on the loans he needed to fund his war with the South.  With the new banking law, Lincoln was then able to print up the millions of dollars he needed which was debt and interest free.  Clearly this was not what the greedy bankers wanted as they can only profit when they get their pound of flesh from financial transactions they control.  Right after the war ended Lincoln was assassinated, and shortly thereafter the so-called Greenback law was rescinded, a new national banking act was passed, and all money became interesting-bearing again.

How the Federal Reserve System Works

The Federal Reserve System is the result of the Congress and President having agreed to privatize the nation's money system and relinquish the power that should have remained the government's exclusive right.  That act was so outrageous the Fed had to be deliberately designed to look like a branch of the federal government to hide the fact that it's really an all-powerful privately owned banking cartel whose member banks (including all the national ones) share in the vast profits earned from having the most important of all franchises governments alone should have - the right to print money in any amount, control its supply and price, and benefit hugely by loaning it out for a profit including to the government itself that must pay interest on the money it should never have to if it simply printed its own.  Think of what happened as the government having legalized the right to counterfeit the national currency for private gain.  It's no exaggeration to claim this is the greatest ever of all financial scams causing incomprehensible harm with the public none the wiser.  Here's how it works in simple terms:

The Fed was given the authority to conduct the nation's monetary policy with the power to control the supply and price of money.  It has three ways to do it - through open market operations, the discount rate it charges member banks, and the reserve requirement percentage of member banks assets it requires them to hold and not loan out.  The Board of Governors is responsible for handling the discount rate and reserve requirements while the Federal Open Market Committee (FOMC) is in charge of the open market operations of buying or selling bonds explained further below.  Using these tools, the Fed is able to influence the supply and demand for money and thus directly control the federal funds short-term rate that's always fixed unless the Fed wishes to raise or lower it.  Longer rates are controlled by the powerful institutional traders in the bond market.

The FOMC and How It Works

The Federal Open Market Committee is really key to the whole process of money creation or contraction.  It consists of 12 members - seven members of the Board of Fed Governors, the president of the New York Fed Bank (the most important one of all) and four of the remaining 11 Reserve Bank presidents who serve one year terms on a rotating basis.  The FOMC holds eight regularly scheduled meetings a year to assess economic conditions and decide how loose or tight it wants monetary policy to be to further its stated goal of sustainable economic growth and price stability.

The FOMC literally has the power to create money out of nothing.  It does it in a four step process:

Step 1 - The FOMC first approves the purchase of US government bonds on the open market.

Step 2 - The New York Fed bank buys them from sellers (financial markets always have an equal number of buyers and sellers).

Step 3 - The Fed pays for its purchases with electronic credits to the sellers' banks, which, in turn, credit the sellers' bank accounts.  These credits are literally created out of nothing.

Step 4 - The banks receiving the credits can then use them as reserves to enable them to loan out as much as 10 times their amount (if their reserve requirement is 10%) through the magic (only banks have) of fractional reserve banking and, of course, collect interest on all of it.  What a business, and it's all legal.  Imagine how rich we might all be if we as private individuals could do the same thing.  Borrow a million from the Fed and like magic it becomes 10 times as much, and we get to collect interest on all but the 10% of it we must hold in reserve.  This is the magic of fractional reserve banking money creation and explains how powerful an economic stimulus it is when the Fed wants to enhance economic growth.

When the Fed wishes to contract the economy by reducing the money supply, it simply reverses the above process.  Instead of buying bonds, it sells them so that money moves out of the buyers' bank accounts instead of into them.  Bank loans must then be reduced by 10 times if the reserve requirement is 10%.

Stephen Lendman [send him email] lives in Chicago, and maintains a blog at http://sjlendman.blogspot.com

How the Federal Reserve Runs the US - Part IV
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by Stephen Lendman

How the Fed Harms the Public Interest

The Federal Reserve System exists only to serve its owners and member banks and in doing so is hostile to the public interest.  That's because it's a banking cartel with the power to restrict competition for greater profits gained at our expense.  It goes from our pockets to theirs, and the public loses in at least four ways:

One - Through the invisible tax of inflation that results from the dilution of purchasing power caused by newly created money entering the system reducing the value of dollars already there.  The Greenspan Fed was especially expansive, never was held to account for its excess and was able to pass a serious problem it created on to a future Fed chairman and society to deal with.  The man we now lionize as a monetary magician began sensibly.  From 1982, before he arrived in 1987, until 1992, the money supply increased on average by 8% a year.  But from 1992 - 2002, the printing press worked overtime in sync with the deregulation and growth of global markets expanding the currency by more than 12% a year.  It became even more extreme post 9/11 and since 2002 grew at a 15% rate.  It now has more than doubled in less than a decade.  It appears that the new Fed chairman has taken note and has begun reducing the rate of money expansion as he continues raising the federal funds rate to whatever level he has in mind.

Currency traders as well apparently have taken note of the rate of money supply expansion overall.  Except for a respite in 2005, it's quite likely the dollar weakness since 2002 is the result of the excess amount of them created for the Bush administration's profligate spending to fund its endless wars and reckless tax cuts for the rich.  The problem is further compounded as from 1964 to the present debt service has grown from 9% to 16.5% of the federal budget and rising; the current account deficit has gone from a 1% surplus to an almost 7% deficit; and federal indebtedness has grown by 40% just since 2001 and financed in large part by "the kindness of (foreign) strangers" that may be growing restive.  Furthermore, since March, 2006, the Fed stopped publishing the M-3 aggregate of the total amount of dollars in circulation.  With that transparency gone, big buyers of US Treasuries now have to calculate the value of the dollar based on speculation and uncertainty rather than hard data - not a way to inspire trust in the financial markets that function best in an atmosphere of openness and clarity.

Two - The public also loses because the banking cartel is able to practice usury - from it's power over a flexible currency to artificially move rates up or down to any level it chooses which many small lenders in a truly free and open market can't do.  In addition, the cartel's market dominance forces most borrowers (especially smaller ones less able to issue their own debt instruments) to come to them for loans which it's then able to make using what should be the peoples' money available to them at the lowest possible cost from many highly government regulated small lenders competing for customers. 

Three -  Through the taxes, we, the public, must pay to cover the interest on the huge national debt (now over $8.4 trillion) accumulated from the money the Fed printed and loaned to the government.  As mentioned earlier, that now totals an annualized amount exceeding two-thirds of a trillion dollars and increasing daily.  It's made the bankers rich, ordinary people poorer, and the public none the wiser it's been fleeced big time.

Four -  Compounding the above abuse, the cartel is able to get the public to bail out the system with more of its tax dollars.  It happens whenever any of the too-big-to-fail banks need financial help to survive.  The same is true for big corporations like Chrysler or Lockheed, large investment firms or hedge funds like Long-Term Capital Management or even countries like Mexico.  It's also true when a single bank goes out of business and depositors must be compensated or more seriously in the wake of a systemic financial meltdown like the one that wiped out many savings and loan banks in the 1980s.  Whether it's a single bank or many dozens at a time, public tax dollars are used to save the system or just pick up the tab to repay depositors insured against losses through government insurance protection up to a stipulated amount per account.

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How Would Adam Smith Have Reacted to the Federal Reserve System

This concentration of banking cartel wealth and power is the opposite of what Adam Smith, the ideological godfather of free market capitalism, advocated in his writings including his seminal work The Wealth of Nations.  Smith wrote about an "invisible hand" that he said worked best in a free market with many small businesses competing locally against each other.  He strongly opposed the concentrated mercantilism of his day (what there was of it) which now would be the equivalent of today's giant transnational corporations and the banking cartel with the power to restrict competition, maintain higher prices than otherwise possible and earn greater profits as a result at the public's expense. 

The kind of banking cartel that exists today is precisely what Smith would have condemned.  But having a central bank is not in itself a bad thing provided the bank is government owned, controlled and operated for the public welfare.  There's only a problem when through subterfuge the bank is set up to appear government owned and run but is, in fact, for private profit the way ours is and most others as well.  And in the US, to make the arrangement work, a mostly publicly appointed governing authority runs the System acting as a shill for its private for-profit banking cartel members that wanted it in the first place and got a corrupted Congress to give it to them.  To work, the cartel needs the cover it gets from its partnership with government, but it's through that arrangement that it harms the public interest for its own private gain.

And that goes to the heart of the problem: that the Congress elected to serve the people instead betrayed them by creating an all-powerful banking cartel and gave it the authority to practice fractional reserve banking with the power to get free money by creating it out of nothing.  It then allowed its members a near-monopoly right to set the rates of interest they wish to charge borrowers. The whole process amounts to a legally sanctioned heist by the powerful banks working in league with government for its own gain.  It's also part of a more extensive government arranged process to transfer wealth from the people to the pockets of large corporations and the rich and doing it while those being harmed are unaware it's even happening.

Another Way the Federal Reserve System Harms the Public

The Fed harms the public welfare in one other important way, and again most people are none the wiser about it.  Supposedly the Federal Reserve System was established to stabilize the economy, smooth out the business cycle, maintain a healthy rate of sustainable growth while holding prices steady and benefitting everyone.  So how well has it done its job?  Since its creation in 1913, and with them in charge, we had the crashes of 1921 and the most important and remembered one in 1929.  That was followed by The Great Depression that lasted until the onset of WW II that noted conservative economist Milton Friedman explained was caused and exacerbated because the Federal Reserve oddly decided to reduce the money supply at a time of economic contraction instead of increasing it.  We then had recessions in 1953, 1957, 1969, 1975, 1981, 1990 and 2001.  We also had inflation beginning in the 1960s which became quite severe through much of the 1970s and early 1980s.  And we had a major banking crisis in the 1980s at which time more banks and savings and loan associations failed than ever before in our history.  It happened in the wake of financial market deregulation when banks were allowed to pursue their own interests without government oversight to check their willingness to assume excess risk or stop them from trying to get away with deliberate fraud.

Along with the economic stability the Fed never achieved, we've also had soaring consumer debt; record high federal budget and trade deficits; a high level of personal bankruptcies and rising mortgage loan delinquencies; interest on a mounting national debt that's a large and rising percentage of the federal budget; the loss of our manufacturing base and it's high-paying jobs with good benefits because they're being exported to low wage countries; an economy in which services now account for nearly 80% of all business that provide mostly lower paying, less skilled jobs with few or no benefits; and a widening income and wealth gap that continues to harm lower and middle income earners to benefit the rich and well-off privileged few and a government that encourages it.

Sum it all up and the conclusion is clear.  The one thing the Fed failed to accomplish above all else was what it was established to do in the first place.  But it's much worse than that if we understand a cartel's real motives.  It's not to serve the public interest.  It's to abuse it because that's how it benefits most.  It's able to do it with its legally sanctioned concentrated power and a friendly government in league with it as partners or facilitators.  It's from that cozy hidden from view arrangement that it's able to get away with the grandest of grand thefts.

Stephen Lendman [send him email] lives in Chicago, and maintains a blog at http://sjlendman.blogspot.com

How the Federal Reserve Runs the US - Part V
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by Stephen Lendman

A Needed Solution to A Huge Problem

From the information presented above, it's clear that the Federal Reserve System was established through stealth and deceit by a handful of corrupted politicians in service to their powerful banking and Wall Street allies.  They did it to defraud the public and without them being any the wiser about what, in fact, had been done or how harmful it was to be to their welfare and interests.  Those in the Congress and President Wilson (a man trained in the law, one-time practicing attorney, former esteemed academic and president of Princeton University) either knew or should have known that the act he and they approved establishing the Fed was in direct violation of the Constitution they were sworn to uphold. They didn't, they broke the law, and the public paid dearly for their crime ever since to this day.

So what recourse is left, and can people be mobilized to pursue it.  There's only one sensible and just solution to undo the damage done to so many for so long - abolish the Federal Reserve System and restore the power it now has to the federal government working for the public welfare.  Take it back from the powerful banking cartel working against it and never allow it to be in its hands again.  That alone is the only way.  The great German poet and playwright Bertolt Brecht would have agreed and once said it was "easier to rob by setting up a bank than by holding up (one)." 

Freeing us from the these powerful "Money Changers" would have enormous benefits for everyone.  It would establish a prudent policy of money creation that would minimize our most unfair tax - inflation which is caused by private for-profit bankers manipulating the nation's money supply to enhance their profits.  It would stabilize the economy and smooth out the extremes in the business cycle exacerbated by the cartel working for its benefit and against ours.  It would lower the cost of money for borrowers because it would end the monopoly power the cartel now has to set the rates it chooses by opening the market to more competition.  It would reduce the growing and oppressive national debt freed eventually from the extra money supply growth needed to pay it off.  It would lower the public's tax burden as less revenue would be needed for debt service.  It would be a momentous step toward reducing and hopefully one day eliminating the overwhelming power of all predatory corporate giants preying on us so they can grow and prosper.  It might even discourage wars which are only fought for wealth and power - never for glory or to make the world safe for democracy or other false motives.  Without a powerful corporate banking cartel and other industry giants that feed on the human misery they create, there would be less of a reason to pursue any.  Try to imagine that kind of world and a government working for the public welfare instead of harming it as it now must do in service to capital. That world is possible, and responsible people need to work for it as the one we now have has failed and must be changed before it's too late.

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A View of the World Created by the Interests of Capital and Our Government That Supports It 

It's the ugly, corrupted world of neoliberal "free market" capitalism controlled by giant corporations; that benefits the privileged few alone causing great human misery and despair; a despotic world that can't endure nor must we allow it to much longer; one with endless wars for power and profit; where people are commodities to be used as needed and discarded like trash when they're not; with no concern for preserving an ecology able to sustain us and won't much longer because we're destroying it and ourselves for profit; where essential human needs don't matter under an economic model only valuing private gain; where democracy is incompatible with predatory capitalism; one no one should want to live in or ever have to; one we must change or perish.  In the language of capital, that's the bottom line.  Only a mass movement of committed people can change that world.  It must or we all will. 

Unless we can move from our failed economic model to a better alternative, it will end on its own one day by one means or other.  But it may be a denouement no one would wish for - it's own self-destruction taking all else with it either by nuclear holocaust or an environment so inhospitable it won't support our ability to live in it.  Our only chance is to work for change while there's still time.

A Vision of A Different Kind of World

History proves a better world is possible when committed people work hard enough for it.  It's how slavery was ended; workers won the right to organize and bargain collectively; women gained equal suffrage to men, control of their own bodies, and more rights and status in the work force; blacks and other minorities won important civil rights; and politicians once enacted important social legislation if only out of fear of what might happen if they didn't.  

Thomas Jefferson explained the "The price of liberty is eternal vigilance."  It's also the price to keep our hard won social gains.  For the past generation those gains have eroded while we weren't paying attention and only mass people action can regain them.  The goal should be for a world of caring and sharing; where peoples' lives improve because we all work together for it; one at peace and not with endless wars to benefit the rich and powerful at our expense; where all essential human needs are met because governments work for the common good to assure it; with real participatory democracy where the public and elected officials work together to keep it strong and vibrant; with no oppressive corporate giants or banking cartels because the law won't allow any; where ecological nurturing and preservation are central; with clean air, water and soil and food that's fit and safe to eat; a much simpler world, more locally based than today's where notions like globalization aren't even in the vocabulary; one based on social equity and justice for all with government, law enforcement and the courts working to assure it stays that way; one we all want to live in and hope some day we can; one we want to pass on to future generations; one we can't afford not to have because the alternative may be no world at all. 

We may now be at a key watershed moment where our fate hangs in the balance.  We can either work together for a better, sustainable world or likely become the first species in it ever to destroy itself.  If it happens, we'll likely take most others with us and not leave much behind for the few hearty ones that remain.  We no longer have the luxury of debate for the kind of world we need to survive.  The giant banks and corporations  won't give it to us nor will a hostile government allied with them.  It's up to us to go for it or likely perish if we fail.  A good beginning would be by driving the Federal Reserve "money changers" out of our temple and the corporate giants with them.  A better world is possible if we remember and live by political theorist Antonio Gramsci's inspirational words about "the optimism of the will."  With it, organized people can find a way to beat organized money.

Stephen Lendman [send him email] lives in Chicago, and maintains a blog at http://sjlendman.blogspot.com

We're Going to Have to Break the Bank
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by John De Herrera

I've been hanging out over at Daily Kos, and recently there were two diaries that if placed side by side produce an interesting idea.

The first is about K Street, the sad reality that never goes away. Have you heard Harry Reid or Nancy Pelosi say they are going to propose legislation to blow up K Street? Oh, they might title some nonsense with the assurances of reform, but change is unlikely.

The K Street piece was written by David Sirota, the best DKos diarist these days. It would be great if David Sirota heads a news department at a broadcast network one day.

The second diary has a 1995 documentary, that if you watch, you're initiated into an aspect of reality rarely talked about.

"Politicians & Lobbyists Gone Wild - D.C.'s New Reality TV" by David Sirota
http://www.dailykos.com/story/2006/12/7/11170/4733

"I killed the bank" by Quequeg
http://www.dailykos.com/story/2006/12/7/221733/660

Politics as usual: that's what it looks like we're about to break open or be overtaken by for the rest of our lives.

Overtaken? The rest of our lives? What are you talking about?!

If the electoral process and broadcast media are not reformed America will suffocate and die. It will still be called America come 2008, but it will not be what it's been for over two hundred years. The Status Quo is threatening not only to doom the way we hold and carry out elections, but how much Americans are allowed to know about their government.

The Status Quo though.... What is it? What best represents the SQ?

Is it the advertisements "Presidency 2008: Next Economic Leader" showing Kerry, Giuliani, Rice and Clinton?

Is the SQ the debate about whether to impeach or not? Should Democrats move to impeach quickly? Is the SQ what the L.A. Times had as headline: "Bush Not Swayed By Findings In Iraq Study."

Maybe that's just what the SQ gives rise to, because in the real world (a better one than the one we're living in now), it wouldn't matter what Bush thought; because as chief executive he vacationed for a month leading up to 9/11, invaded Iraq, mismanaged Katrina, etc., so it wouldn't matter if he were swayed or not about anything because he would already have been impeached. The SQ has prevented proper governance from taking place. Some say the SQ came into being in 2000, when the Supreme Court told a state to stop counting votes in a close presidential election. Is the Supreme Court the SQ? What is the SQ?! If it's a multifaceted thing--corporate media, K Street, and the Supreme Court all rolled into one--then what holds it together? How does the narrative hang in place where we have ridiculous things in our lives that nobody ever seems to really do anything about?

A CENTRALIZED BANK

If you wanted to pin the SQ to its single most definitive thing--it and all it gives rise to--you'd stick it to the Federal Reserve.

Imagine the letters F.E.D.E.R.A.L. R.E.S.E.R.V.E. tattooed on the foreheads of John Kerry and George Bush, Hillary Clinton and Condoleezza Rice, Harry Reid and Nancy Pelosi, Tim Russert, Brian Williams and Katie Couric--pick your favorite politician or political talking head. That would be a pretty cool art piece, a frame and Federal Reserve tattooed in bold black across their foreheads. Some American artist has probably already done it; probably more than one artist from different regions...

But that which keeps the SQ in place will never allow Katie Couric to discuss the Federal Reserve, it's history, and why it's the end of the line. There is no discussion beyond a discussion about the Federal Reserve. It's not a Conspiracy Theory either, the facts are out there in the open. The documentary "Money Masters" found on Google video, is fascinating. It's a documentary made back in 1995, and it is done well. This may be news to some, but if you control the banks, you control everything. You decide where money will go, and where it will not. But if we dismantle the Federal Reserve wouldn't everything burst into flames?

If you don't have the time or don't feel like watching the documentary, briefly, back in 1913, while most of Congress was away on Christmas break, the Federal Reserve became a fact of American history. It's a private bank that acts like it's a governmental agency. It is not and it's been with us all this time.

It's not K Street that's the problem, it's not the endless stream of half-truths broadcast by corporate media, it's not tattooed politicians, it's the central bank of the U.S. and it is controlled by private interests. America is about to perish because of the Federal Reserve. Which doesn't bother the private interests helming the Federal Reserve one bit. A constitutional amendment could take the powers of the Federal Reserve and place them back where they belong, the U.S. Treasury. It most certainly should be enshrined in the Constitution, to lock out for good that which will be prey once the public is again distracted. Only a constitutional amendment has the political weight necessary to break the SQ.

No amount of legislation coming out of a corrupt congress is going to restore order out of the chaos created by private monies treated as free speech. As someone great once said, the 1st Amendment does not guarantee the right for men to say what some private interest pays them to say for its own private advantage, it's only to afford the freedom to say what they think as citizens. But if money is considered speech, and your the bank which controls all other banks, then with some time, you would end up controlling everything that is said. So all our favorites on the Sunday morning news shows, it's none of their faults, many may not even grasp the importance of the Federal Reserve. No it's just the way something has become since going back to 1913.

STRIKE THE ROOT

So, newsflash, if you want the SQ to be broken so it can be reformed into a world of proper governance, peaceable solutions and sustainability, we're going to have to break the bank. If you are one who believes it is already too late, that a crash is coming, hope to see you on the other side and all that? I for one would like to be caught working for justice.

Now, we know that talking about the Federal Reserve in the open is not going to get us anywhere. It's just too much for most people to get their head around, so we'll keep that a secret between us. For now let's put our imaginations to staging an act of civil disobedience in the capitol which raises awareness of what more than 3/4 of all Americans would love to see: a national convention.

Still working on ArticleV.org, but will have text up soon. Until then, for those who are so moved, please start thinking about whether you will be able to participate in a ceremony in the capitol sometime before next summer; and if you are not able, please consider what you may have to volunteer towards ArticleV.org, and/or what funds you can contribute. It might not be clear now, but things may dawn on us sometime after New Year's.

John De Herrera [send him email] is an activist, writer, and proponent of an Article V Constitutional Convention.  Find more of John's work at http://www.article5.org/ and http://www.cc2.org/

The Fed: Jekyll Island Monster
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by Stephen Neitzke

In November 1910, seven wealthy men left the Northeastern US on trains to do some duckhunting on an island off Brunswick, Georgia. They carried all their duckhunting gear in plain sight, so that any snooping reporter could see that they were going duckhunting. And reporters really snooped in those days. The Reform Era muckrakers were still at their 1890s-1912 peak, producing exposés that still startled everybody.

On arrival, the duckhunters moved into a posh resort owned by JP Morgan -- on Jekyll Island.

In later years, at least one of the men admitted that he had never shot a duck, and never intended to. Another of the men later punned that the duckhunting was "a blind".

The seven wealthy men were surrogates of national government and powerful financiers. The financiers were seeming competitors, subordinate to and regulated by the government. However the surrogates were not at Jekyll Island to sharpen their apparent relationships. They were there to agree on unconstitutional collusions between private corporations and government, which would restrict their lesser competitors and allow them to create debt-based money secured by nothing but thin air, from which they and their cronies could get rich by endless multiplication of debt-created money in the financial treason called "fractional reserve banking".  They were there to bring the deceits, corruptions, frauds, and murderous machinations of centuries-old European central banking to the US.  They were there to keep the rabble down and to keep the right people up.

They were -- Nelson W. Aldrich (Republican whip in the Senate and father-in-law to John D. Rockefeller, Jr.) -- A. Piat Andrew (Asst Secretary of the Treasury) -- Henry P. Davison, Sr. (partner in JP Morgan Company) -- Charles D. Norton (President, 1st National Bank of New York) -- Benjamin Strong (head of JP Morgan's Bankers Trust, later  chairman of the Federal Reserve) -- Frank A. Vanderlip (President, National City Bank of New York, representing William Rockefeller) -- Paul M. Warburg (partner in Kuhn, Loeb & Company, representing the Rothschilds and Warburgs in Europe). 

US national circumstances were such that the class-race elite -- the superrich --  desperately needed new and extraordinary mechanisms to keep the rabble down and to give the elites increased control.  Citizens of nine states had already rammed direct democracy's I&R (initiative and referendum petition process citizen lawmaking) into their state constitutions -- Arkansas, Colorado, Maine, Missouri, Montana, Oklahoma, Oregon, South Dakota, and Utah.  Citizens in many other states were heavily organized and threatening to institute their own citizen lawmaking.  Class-race elite desperation is probably an understatement.

Across the country, elites were being threatened and driven off decades-old corruptions that held vast profits and power for them.  The losses of those profit-power corruptions made the wider elites community more than a little crazy.  In the I&R states, November 1910, elites had already resorted to the wholesale illegality of overturning the people's rights as given in constitutional law with inferior and unconstitutional statutes.

I&R "administrative law", passed by state legislatures for the regulation of I&R citizen petitions -- proposed law -- had been filled with "separation of powers" constitutional violations, as well as "binding judicial review of proposed law" constitutional violations.  Executive branch officials were instructed by statute to arbitrarily delay, alter, and/or reject constitutionally defined, citizen-proposed law.  Judges were instructed to arbitrarily delay, alter, and/or reject citizen-proposed law with binding court rulings. 

No constitution in the country allows executive branch officials to interfere in proposed law.  No constitution in the country allows judges to perform binding review on proposed law.

Any of those violations against legislature-proposed law would find the violators impeached and removed before dinner.  But doing those same constitutional violations against citizen-proposed law is just what's necessary to keep the rabble down.  It's just what's necessary to gain the profits and power that is theirs alone.

Those delays, alterations, and/or rejections could be applied to any citizen-proposed law.  However, the predator politicians have been cunning enough to selectively apply them only to those citizen-proposed laws that are offensive to money-power.  Anything else slides right through.  This unconstitutional I&R gauntlet remains largely undiscovered these hundred years later.

The natural law of elitists' profits and power had trumped the laws of nations for thousands of years.  It would not any more be set aside by the direct democracy of American rabble than it had by English rabble gathering around the Magna Carta or Republican Roman rabble gathering around the citizen lawmaking of the Council of Plebs.

The Jekyll Island Duck Hunting Society was amazingly successful, for all the wrong reasons, and at huge expense to ordinary Americans.

The Jekyll Island Good Ol' Boys Club saw their labors writ in the stone of federal statute when a compliant and complicit Woodrow Wilson signed the Federal Reserve Act, 23 December 1913.  Mental giant that Wilson was, we can hold him responsible for knowing that his signature was not creating law, but instead was creating an unconstitutional anti-law regime -- null and void from its first moment, enforced under color of law only in constantly repeating felony violations of a broad spectrum of valid federal statutes.  Nearly a hundred years later, the felony violations stack beyond imagination, every second of every day.

(Article Continues Below)

Here's what Wilson and the powerful predators of Congress got away with:

Constitution, Article 1, section 8 -- The Congress shall have power -- paragraph 5 -- To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures.

With the 1913 FRA, Congress and the President unconstitutionally delegated Congress' specifically assigned duty to coin debt-free money secured by its precious metals.  They delegated that duty to a privately owned corporation whose expressed intent was to print debt-based, fiat money secured only by thin air, and whose many other expressed intents were the interests of private financial corporate ownership, not the interests of civil society or its Constitutional governance.

There is nothing in the Constitution that allows the give-away or delegation of any expressed duty/power to any other branch or institution.  The Federal Reserve act was unconstitutional, felonious, and treasonous from its first moment of existence -- and remains exactly that today.

As with the unconstitutional statutes that overturn the constitutional rights of citizens in the I&R states, the Federal Reserve Act is a federal statute that overturns the constitutional rights of citizens at the national level.  This hundred-year-old trick of the super-bigoted class-race elite, their corporate sleaze, and their predator politicians is purely unacceptable.  In today's mega-corruption the old trick is a growing enterprise.  The 2-party, 3-branch, Bush-Cheney Usurpation has made it a chief tenet of their political science. 

Between Jekyll Island and the weeks leading up to the Wilson signing, citizens in another eight states had forced I&R citizen lawmaking into their state constitutions -- Arizona, California, Idaho, Michigan, Nebraska, Nevada, Ohio, and Washington.  It was not at all clear to the elites in 1913 that the interstate citizen action groups increasing direct democracy could be stopped.  The class-race elite had become desperately crazy.

We shouldn't wonder that Congess' majority of predator politicians went along with the rules-violating rush-through of the FRA's passage.  The powerful predators of Congress knew what had to be done to keep the rabble down.  And they were being leaned on by their most important clients -- the superrich.

In our time, we need to look back across the history of US money and banking, and create hard-biting remedies to these financial problems that daily now threaten to destroy us as a nation.

The Constitution's authors had many good reasons for granting expressed duty/powers to specific branches and institutions.

Coining and regulating the value of money, assigned only to Congress, has a history with the Constitution's authors that is stunningly large and stunningly unambiguous.  Their main man of money-first-people-last, Alexander Hamilton, remarked -- "To emit an unfunded paper as the sign of value ought not to continue as a formal part of the Constitution, nor ever hereafter to be employed; being, in its nature, repugnant with abuses and liable to be made the engine of imposition and fraud."

Hamilton knew the Bank of England well.  He knew that it had been the model for, and, often, the controller of, the other central banks of Europe.  With a bad track record stretching back to 1694, he knew about its debt-based money created out of thin air.  He knew about its "fractional reserve banking", which allowed it to create multiples of its thin-air, fiat money with every loan that it entered into its books -- straightforward usury in its most depraved and treasonous form.  He knew about its monetary and political machinations in the creation of war, during which it funded both sides, maximizing its creation of debt.  He knew that it worked only to benefit its private owners, never its civil society.

And yet, that "unfunded paper", fiat money secured by nothing more than thin air, is exactly what the 1913 Federal Reserve was commissioned to do -- by the same Congress whose members vow to uphold the Constitution.  You might send them a note, "asking them when they intend to start", quips G. Edward Griffin, author of the smooth-reading, history-intense book, The Creature from Jekyll Island:  A Second Look at the Federal Reserve.

The Creature from Jekyll Island, 4th edition, 2002, should be required reading for every American over the age of 15.

In 1935, SCOTUS slapped down the Congressional give-away of its legislative authority in Schechter Poultry Corporation v. US (295 U.S. 495). After citing the basic tenets of the Constitution's Article 1, the court ruled, "The Congress is not permitted to abdicate or to transfer to others the essential legislative functions with which it is thus vested."
 
Some were quick to apply that SCOTUS ruling to the Federal Reserve. There were howlings, political explosions, and much noisy gibberish -- and then every criminality of the Federal Reserve simply continued.
 
(Make a note.  That 1935 SCOTUS ruling also applies to Congress' unconstitutional transfer of its exclusive war powers to Bush, prior to Bush's unconstitutional invasion of Iraq.  For that unconstitutional transfer, all 373 assenting members and senators are co-conspirators in the felony conspiracy against our soldiers' rights to be sent to war ONLY at the expressed order of Congress.  For his invasion order, Bush and his admirals and generals round out that felonious pack of co-conspirators, as defined in the federal statute, 18 USC 241.  Felony forfeits all immunities, legislative, executive, and judicial.  All of them should have been criminally prosecuted immediately after the illegal invasion.  Because that felony violation of our soldiers' rights has resulted in death and maiming, penalties can include life imprisonment or death -- as specified in 18 USC 241.)  

Our $8.5 trillion national debt, a direct result of debt-based money creation, held by nations and foreign central banks who, history shows, will destroy our nation without a second thought when their profits picture is good enough, is just one measure of the Federal Reserve's success.

The Federal Reserve's only concerns are the profits and power of its private owners.  In a conflict between the interests of their private owners and the US citizenry, they have no concerns for the US citizenry.  Disintegration of the US economy will be induced the day that it provides enough profit to the Euro-American central bank cabal.

The FRA is the most financially and politically powerful of the corruption machines that rule the everyday lives of Americans.  This is the overarching corruption machine that gives confidence and arrogance to the operators of all the other corruption machines.  This is the one that makes every other corruption machine possible.

The omnibus corruption engine would be gutted and near lifeless without the Federal Reserve's multi-faceted "central banking" scam.  We desperately need to abolish the Federal Reserve system.

We have many reasons for abolishing the Federal Reserve and for setting a heavily regulated, governmental central banking system in its place.  A pro-people, pro-sustainability-economics central banking system that will issue debt-free money and do fully secured banking is the key to a species-mature governance.

Perpetual indebtedness and perpetual war are two giant keys for civil society's control by the superrich. their corporate sleaze, and their predator politicians.  Those two giant keys are just part of the anti-democracy, anti-people arsenal that is firmly held by the Federal Reserve and its inbred partner, the international central banking cabal.

Until you understand the reasons for abolishing the Federal Reserve system, you are simply part of the problem.

The seven reasons for abolishing the Fed, as given by Griffin in his book, The Creature from Jekyll Island, "sound absurd to the casual observer" when stated without their supporting facts and arguments.  The purpose of his book, he says, is to show that all seven bare-bones statements "are all-too-easy to substantiate".  Clearly, his book delivers the substantiation.

Griffin's seven reasons for abolishing the Fed are --

(1) It is incapable of accomplishing its stated objectives.

(2) It is a cartel operating against the public interest.

(3) It is the supreme instrument of usury [with its treason of "fractional reserve banking", endlessly multiplying the money supply, endlessly multiplying debt, endlessly multiplying inflation].

(4) It generates our most unfair tax [inflation due to constantly increasing money supply].

(5) It encourages war.

(6) It destabilizes the economy.

(7) It is an instrument of totalitarianism.

Those who are laboring to renovate the Democratic Party so that government can save us should make a note.  It is very probable that the international banking cabal's many levers threatening the existence of our country is the cause of the Democratic Party's terminal waffle, flip-flop, and treasonous support of neocon treasons.

Better ask yourselves whether those behaviors show any evidence that a newly strong Democratic Party -- still saddled with a majority of its old-school corruption machine operators -- could be brought to face down the central banking cabal's threats.  Could they be brought to abolish the Fed, just when they've gained the power to obscenely excessive profits from the Fed's horrendous defrauding of the American people?

© 2006 Stephen Neitzke

by Rep. Ron Paul (R-TX)

All great republics throughout history cherished sound money. This meant that the monetary unit was a commodity of honest weight and purity. When money was sound, civilizations were found to be more prosperous and freedom thrived. The less free a society becomes, the greater the likelihood its money is being debased and the economic well-being of its citizens diminished.

Alan Greenspan, years before he became Federal Reserve Board Chairman in charge of flagrantly debasing the U.S. dollar, wrote about this connection between sound money, prosperity, and freedom. In his article "Gold and Economic Freedom" (The Objectivist, July 1966), Greenspan starts by saying:  "An almost hysterical antagonism toward the gold standard is an issue that unites statists of all persuasions. They seem to sense.that gold and economic freedom are inseparable."  Further he states that:  "Under the gold standard, a free banking system stands as the protector of an economy's stability and balanced growth."  Astoundingly, Mr. Greenspan's analysis of the 1929 market crash, and how the Fed precipitated the crisis, directly parallels current conditions we are experiencing under his management of the Fed. Greenspan explains:  "The excess credit which the Fed pumped into the economy spilled over into the stock market- triggering a fantastic speculative boom."  And, ".By 1929 the speculative imbalances had become overwhelming and unmanageable by the Fed."  Greenspan concluded his article by stating: "In the absence of the gold standard, there is no way to protect savings from confiscation through inflation."  He explains that the "shabby secret" of the proponents of big government and paper money is that deficit spending is simply nothing more than a "scheme for the hidden confiscation of wealth."  Yet here we are today with a purely fiat monetary system, managed almost exclusively by Alan Greenspan, who once so correctly denounced the Fed's role in the Depression while recognizing the need for sound money.

The Founders of this country, and a large majority of the American people up until the 1930s, disdained paper money, respected commodity money, and disapproved of a central bank's monopoly control of money creation and interest rates. Ironically, it was the abuse of the gold standard, the Fed's credit-creating habits of the 1920s, and its subsequent mischief in the 1930s, that not only gave us the Great Depression, but also prolonged it. Yet sound money was blamed for all the suffering. That's why people hardly objected when Roosevelt and his statist friends confiscated gold and radically debased the currency, ushering in the age of worldwide fiat currencies with which the international economy struggles today.

If honest money and freedom are inseparable, as Mr. Greenspan argued, and paper money leads to tyranny, one must wonder why it's so popular with economists, the business community, bankers, and our government officials. The simplest explanation is that it's a human trait to always seek the comforts of wealth with the least amount of effort. This desire is quite positive when it inspires hard work and innovation in a capitalist society. Productivity is improved and the standard of living goes up for everyone. This process has permitted the poorest in today's capitalist countries to enjoy luxuries never available to the royalty of old.

But this human trait of seeking wealth and comfort with the least amount of effort is often abused. It leads some to believe that by certain monetary manipulations, wealth can be made more available to everyone.  Those who believe in fiat money often believe wealth can be increased without a commensurate amount of hard work and innovation. They also come to believe that savings and market control of interest rates are not only unnecessary, but actually hinder a productive growing economy. Concern for liberty is replaced by the illusion that material benefits can be more easily obtained with fiat money than through hard work and ingenuity. The perceived benefits soon become of greater concern for society than the preservation of liberty. This does not mean proponents of fiat money embark on a crusade to promote tyranny, though that is what it leads to, but rather they hope they have found the philosopher's stone and a modern alternative to the challenge of turning lead into gold.

Our Founders thoroughly understood this issue, and warned us against the temptation to seek wealth and fortune without the work and savings that real prosperity requires. James Madison warned of "The pestilent effects of paper money," as the Founders had vivid memories of the destructiveness of the Continental dollar. George Mason of Virginia said that he had a "Mortal hatred to paper money."  Constitutional Convention delegate Oliver Ellsworth from Connecticut thought the convention "A favorable moment to shut and bar the door against paper money."  This view of the evils of paper money was shared by almost all the delegates to the convention, and was the reason the Constitution limited congressional authority to deal with the issue and mandated that only gold and silver could be legal tender. Paper money was prohibited and no central bank was authorized. Over and above the economic reasons for honest money, however, Madison argued the moral case for such. Paper money, he explained, destroyed "The necessary confidence between man and man, on necessary confidence in public councils, on the industry and morals of people and on the character of republican government."

The Founders were well aware of the biblical admonitions against dishonest weights and measures, debased silver, and watered-down wine. The issue of sound money throughout history has been as much a moral issue as an economic or political issue.

Even with this history and great concern expressed by the Founders, the barriers to paper money have been torn asunder. The Constitution has not been changed, but is no longer applied to the issue of money. It was once explained to me, during the debate over going to war in Iraq, that a declaration of war was not needed because to ask for such a declaration was "frivolous" and that the portion of the Constitution dealing with congressional war power was "anachronistic."  So too, it seems that the power over money given to Congress alone and limited to coinage and honest weights, is now also "anachronistic."

If indeed our generation can make the case for paper money, issued by an unauthorized central bank, it behooves us to at least have enough respect for the Constitution to amend it in a proper fashion. Ignoring the Constitution in order to perform a pernicious act is detrimental in two ways. First, debasing the currency as a deliberate policy is economically destructive beyond measure. Second, doing it without consideration for the rule of law undermines the entire fabric of our Constitutional republic.

Though the need for sound money is currently not a pressing issue for Congress, it's something that cannot be ignored because serious economic problems resulting from our paper money system are being forced upon us. As a matter of fact, we deal with the consequences on a daily basis, yet fail to see the connection between our economic problems and the mischief orchestrated by the Federal Reserve.

All the great religions teach honesty in money, and the economic shortcomings of paper money were well known when the Constitution was written, so we must try to understand why an entire generation of Americans have come to accept paper money without hesitation, without question.  Most Americans are oblivious to the entire issue of the nature and importance of money. Many in authority, however, have either been misled by false notions or see that the power to create money is indeed a power they enjoy, as they promote their agenda of welfarism at home and empire abroad.

Money is a moral, economic, and political issue. Since the monetary unit measures every economic transaction, from wages to prices, taxes, and interest rates, it is vitally important that its value is honestly established in the marketplace without bankers, government, politicians, or the Federal Reserve manipulating its value to serve special interests.

Money As a Moral Issue

The moral issue regarding money should be the easiest to understand, but almost no one in Washington thinks of money in these terms. Although there is a growing and deserved distrust in government per se, trust in money and the Federal Reserve's ability to manage it remains strong. No one would welcome a counterfeiter to town, yet this same authority is blindly given to our central bank without any serious oversight by the Congress.

When the government can replicate the monetary unit at will without regard to cost, whether it's paper currency or a computer entry, it's morally identical to the counterfeiter who illegally prints currency. Both ways, it's fraud.

A fiat monetary system allows power and influence to fall into the hands of those who control the creation of new money, and to those who get to use the money or credit early in its circulation. The insidious and eventual cost falls on unidentified victims who are usually oblivious to the cause of their plight. This system of legalized plunder (though not constitutional) allows one group to benefit at the expense of another. An actual transfer of wealth goes from the poor and the middle class to those in privileged financial positions.

In many societies the middle class has actually been wiped out by monetary inflation, which always accompanies fiat money. The high cost of living and loss of jobs hits one segment of society, while in the early stages of inflation, the business class actually benefits from the easy credit. An astute stock investor or home builder can make millions in the boom phase of the business cycle, while the poor and those dependent on fixed incomes can't keep up with the rising cost of living.

Fiat money is also immoral because it allows government to finance special interest legislation that otherwise would have to be paid for by direct taxation or by productive enterprise. This transfer of wealth occurs without directly taking the money out of someone's pocket. Every dollar created dilutes the value of existing dollars in circulation. Those individuals who worked hard, paid their taxes, and saved some money for a rainy day are hit the hardest, with their dollars being depreciated in value while earning interest that is kept