By: Richard A. Correa Sr. SGT RIARNG, Retired
One of the top priorities of the TEA Parties and 9/12ers is the federal government must return to sound fiscal policies. The federal government has abandoned any semblance of common sense when it comes to management of the peoples’ resources. Why is it that the people we send to Washington leave common sense at home and become totally irrational when it comes to managing the federal budget? The cause of this illness is the Federal Reserve System.
What the average American is unaware of is that the Federal Reserve System is not a part of the federal government of these United States. It is a banking cartel, setup to be the central bank of these United States, owned by private bankers, and by federal law it has complete control of the money supply of the United States of America. The establishment of the Federal Reserve System has transformed the currency of the United States of America from a medium of exchange, the value of which is set by congress, to a commodity the value of which can be manipulated by those that control the Federal Reserve System, meaning the bankers that own it.
Why is this important, the following statements made by Mayer Amschel Rothschild, of the European banking family, explain it clearly:
“Give me control of a nation’s money and I care not who makes her laws.”
“Permit me to issue and control the money of a nation, and I care not who makes its laws.”
In essence, if you control the issuance and value of a nations’ currency you control the nation.
You may say ‘wait a minute, doesn’t the president of the United States of America appoint the chairman of the board of the Federal Reserve System?’ and you would be correct. The president of these United States appoints, and the US Senate confirms the appointment of, the Chairman of the board of the Federal Reserve System as well as the seven other governors of the Federal Reserve Board of Governors. This is camouflage to make it appear the government controls the Federal Reserve System when in fact the twelve member banks of the system control all banking in the US and by manipulating our currency control the politicians that are elected to office. And if you control the elected officials of a government you control that government.
Under the US Constitution a system like this is illegal. You may ask, ‘if congress passed a law that created this system how can it be illegal?’ A legitimate question, and the answer to that question is found in Article I – Legislative Branch, Section 8 – Powers of Congress, 5th paragraph which states:
“To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures”
If you do a careful reading of the US Constitution you will see that nowhere in the constitution, or any amendment to the constitution, is the authority to legislate the passing of any power or authority of any branch of the federal government to another entity be it governmental or private. As Article VI, 2nd paragraph declares the US Constitution the ‘supreme law of the land’ this makes the Federal Reserve Act of 1913 illegal because it gives a private banking cartel the power granted to congress in Article 1, Section 8, 5th paragraph.
If the above is true, how did this system get established? Why did the political leaders at that time in our history do this?
This time in our history was the ‘height’ of the American Progressive movement. Woodrow Wilson had just taken office and many senators and representatives of both parties were progressives. Many of these people, as do many of todays’ politicians, saw the constitution as a roadblock to what they wanted to accomplish, so they simply ignored it.
The legislation was drawn up at Jekyll Island, South Carolina by the ‘Warburg Group’ in 1910. Among the notables of the ‘Warburg Group’ was Paul M. Warburg, a partner in Kuhn, Loeb & Company and Nelson W. Aldrich, senator from Rhode Island, the republican whip, Chairman of the National Monetary Commission, a business associate of J. P. Morgan and father-in-law of John D. Rockefeller Jr.
As to why they did it, wealth and power of course. In an article published in 1914 in a magazine called The Independent Senator Aldrich was quoted as saying “Before the passage of this Act, the New York bankers could only dominate the reserves of New York. Now we are able to dominate the bank reserves of the entire country.”2 Anthony Sutton, former Research Fellow at the Hoover Institution for War, Revolution and Peace stated “The Federal Reserve System is a legal private monopoly of the money supply operated for the benefit of the few under the guise of protecting and promoting the public interest.”3
Before continuing it should be noted that the Federal Reserve System is not the first attempt at having a central bank for the United States of America, it is the fourth. The last such bank had its’ charter revoked by President Andrew Jackson. From the time of the Jackson administration until 1913 the banking system of the US had its’ ups and downs (booms and recessions/depressions). Even so, the value of the US dollar, in comparison to other nations’ currencies, grew by 13%. Since the establishment of the Federal Reserve System, aggravated by the US going off the gold standard, the value of the US dollar has shrunk to current levels.
The founders, and President Jackson, had this to say about central banks:
Thomas Jefferson said:
“The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered.”
“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”
John Adams said:
“Banks have done more injury to the religion, morality, tranquility, prosperity, and even wealth of the nation than they can have done or ever will do good.”
Andrew Jackson said:
“If Congress has the right under the Constitution to issue paper money, it was given to be used by themselves, not to be delegated to individuals or corporations.”
“Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves.”
So, what is so bad about the Federal Reserve System? The Federal Reserve System is the ‘lender of last resort’ to the United States federal government (and apparently other governments) and it ‘creates’ money. Aren’t these good things? As with all things that depends on how what the bank does affects you.
How the system impacts all of us is the way in which it creates money. Though there are many variations on how this is done there are two basic ways of creating money, loans to the government and loans to private individuals.
Loans to the US Federal Government
How this works is fairly straight forward (keep in mind here that the congress, not the president, dictates the federal budget). Congress passes a bill that tells the administration to spend ‘X’ amount of dollars, in this case let’s say 1.5 trillion dollars. After the president signs this bill into law the Treasurer of the US tells the president and congress the treasury only has 1 trillion dollars in it. The problem is that the bill has been signed into law so the federal government has to spend money that the treasury does not have. So the Treasurer of the US goes to the fed and says ‘I need ½ a trillion dollars.’ The fed, of course, is only too happy to lend the government the money, the only problem is that the money does not exist. For the fed this is not an issue, they simply write a check to the government for ½ a trillion dollars and presto change-o the money is suddenly created out of nothing.
Now, the US taxpayer owes 500 billion dollars to the fed and has to payback this loan, and pay interest on the loan, with ‘real’ money, your tax dollars, and the dollars that existed before the fed loaned this ‘money’ to the US government are worth less because the supply of dollars has just been increased by ½ trillion dollars.
Loans to individuals
Under the Federal Reserve Act all banks in the US became a part of the Federal Reserve System and must follow its’ regulations. Under this system banks must maintain a certain level of ‘cash’ reserves in relation to the number of dollars that the bank loans. This is called fractional reserve banking. The idea is that if there is a ‘run’ on a bank it will have enough ‘cash’ on hand to pay it’s depositors what they have saved in the bank so the bank doesn’t ‘go under’ or ‘fail’. The ratio varies based on fed regulations but it can be easily explained.
For the purpose of this discussion let’s say the ration is 1:9. What that means is that for every dollar deposited in the bank the bank can lend nine dollars. So, on payday you deposit your paycheck in your account at Freds’ bank. Let’s say your paycheck is 100 dollars (hopefully you make more than that but this is an easy number to work with). Now you have 100 ‘real’ dollars in your account at Freds’ bank. Now your neighbor, Bob, needs a loan to fix a hole in the roof of his house. Bob goes to Freds’ bank to get the loan. Under the Federal Reserve System regulations Freds’ bank has to keep the 100 dollars you deposited in your account so they meet the requirement for cash on hand. That’s OK because Freds’ bank can loan 900 dollars that do not exist to Bob because they have your 100 dollars that do exist.
The end result of this is that Bob has to pay Freds’ bank 900 dollars of ‘real’ money, and interest until this loan is paid off (also ‘real’ money) because the bank gave him 900 dollars that did not exist until the bank wrote Bob a check for the loan he needed. Again, all the dollars that existed before Bob got his loan are now worth less because Freds’ bank increased the number of dollars in existence by creating 900 dollars out of nothing
Now take the above scenario and expand it to cover all the loan transactions that take place on each business day in the USA. It’s easy to see why the banks like this system but why do the politicians like it?
When you take the government and individual scenarios together you have the mechanism that drives inflation. Inflation is a hidden tax on all activities in the nation that involve money. The reason politicians love this mechanism is that they don’t have to ‘openly’ increase taxes on the voting public, making it easier to get reelected, and yet they can still spend the publics money like drunken sailors.
Now imagine how things would be if the Federal Reserve Act had never been passed. For one thing your paycheck would be smaller. Well that’s no good, until you realize how much more the dollars you bring home could buy. In 1966 a brand new Ford Mustang was anywhere from $2,416 to $4,428 depending on options. Today a Ford Mustang runs $27,200 for the basic model. That’s over 10 times the 1966 price. This reasoning can be applied to anything else you might buy from candy (I remember buying a single stick of gum for a penny at the local market when I was a kid) to houses.
Also, how much better off would you be if the dollar had continued to gain value instead of losing value after the Federal Reserve Act was passed. That can only be guessed at.
So what do we want? We want an end to the Federal Reserve System and congress to take up it’s responsibilities under Article I, Section 8, paragraph 5 of the US Constitution.
1 The Creature from Jekyll Island, pg. 5, by G. Edward Griffin
2 The Creature from Jekyll Island, pg. 20, by G. Edward Griffin
3 Sutton, Wall Street and F.D.R., pg. 94