Why do YOU hate the fed?

reply to post by GreenBicMan

We didnt bail out Lehman, they failed brother.

Then what happened to their holdings?

I assume they were Holding something... right?

Like Derivatives?

Where did those go?

Who maintained all of their Contracts?


-Edrick

reply to post by GreenBicMan

t is efficient because no matter how you hedge yourself or play it there is better than a 8 out of 10 chance you will either wind up exactly even or lose. Factor in your retail latency and make it 9 out of 10.

So, its not exactly like Producing Wealth... its more like taking advantage of market fluctuations to TAKE money from a system that you don't contribute to....

AMIRIGHT?

-Edrick

reply to post by Edrick


Liquidated.

Ever seen a crazy move in SP 500 Futures at the end of the day?


topics.nytimes.com...

reply to post by GreenBicMan

Liquidated.

Ever seen a crazy move in SP 500 Futures at the end of the day?

Let me see if I get what you are saying...


The bad investments, that were taking LB down.... were covered.


Who Ended up covering the bad Investments that LB made?

-Edrick

reply to post by Edrick


Well classic arbitrage is taking advantage of key fundamental or technical inconsistencies. The more and more participants in the market the more and more that edge diminishes.

This conversation goes way way way over the bounds of this thread. Could write 10 books on it. End of story is though that *IMO*

Efficiency = Time / Number of Participants


Again factor in all the variables that real life provides and the window of opportunity has almost closed before you have seen it open.

reply to post by Edrick


I do not know all details. If I did I would be making 500,000 a year being a corporate lawyer.

Take a look at the link etc.. I really have no idea about who took over what and how. They are selling off pieces like AIG.

reply to post by GreenBicMan

Well classic arbitrage is taking advantage of key fundamental or technical inconsistencies. The more and more participants in the market the more and more that edge diminishes.

So...... Who?

Someone had to cover the Bill.... Who was it?


Was it the US Government?


Was it the Taxpayers?

Efficiency = Time / Number of Participants

Efficiency = WORK / Number of participants


Time =/= Work

-Edrick

reply to post by Edrick


Not all of it was covered.

Some of their assets, like their headquarters, was auctioned off.

Most everything else related to the company is now worthless -- including any/all equity you might have. And, I believe, any securities they might have which were worth something, but couldn't be sold (for whatever reason) were loaned to the fed in exchange for liquidity to help them collapse in an orderly fashion.


I'm not an expert, though, so I'm probably missing a bunch of stuff.. google is your friend

Fractional Reserve Banking causes more money to be created at 9:1 even up to 100:1
Along with interest charged on loans, this drives the supposed "value" of my money to nothing.When there are 9 more dollars created from my 1 dollar deposit, it causes my $1 dollar to be worth less now that there are 8 more of them in circulation. This practice of Fractional Reserve Banking is theft by dilution. Sure I may get a dividend but its no where near the amount they just made off my $1 deposit because they turn around and loan out 9 more dollars from my $1 deposit.

Which means banks (any bank) can make money out of thin air with Fractional Reserve Banking, also while charging interest.

Why are banks loaning out money they do not have and charging interest on money that is not real?

Interest is just like having an invisible printing press that makes real money, you will pay back the Principle and Interest with your sweat and blood. The bank just moves some 0's and 1's around on the computer. I am tired of working my ass off, while they get to manipulate the money supply with a DAMN Keystroke. Why is there some old dude telling me how much our money is going to be worth today?

I have more faith in the World of Warcraft Economy than ours at the moment.

reply to post by sourdiesel


So..

How do you get a loan for a house?

Oh, that pesky fractional reserve banking up to no good again..

Should just make you pay cash.

reply to post by Kaytagg

Not all of it was covered.

Some of their assets, like their headquarters, was auctioned off.

Most everything else related to the company is now worthless -- including any/all equity you might have. And, I believe, any securities they might have which were worth something, but couldn't be sold (for whatever reason) were loaned to the fed in exchange for liquidity to help them collapse in an orderly fashion.

Well, I was wondering about the "Bad Investments" that they made.

Something to do with Securities that they had "Invested" some of their holdings into?

Something about that Investment Failing?

Something about the holdings of LB being liquidated?


Property Value Tanked.

That was their holdings.

Property Value.


Who owns All of the Mortgages now?

And how much money did they loose in this transaction?


-Edrick

[edit on 3-4-2010 by Edrick]

reply to post by sourdiesel


You're ignoring the fact that those banks pay back some of the extra money they made to the savings accounts of depositors who "lent" the bank the money, in order for the bank to make a sound, responsible loan to somebody else.


Also, we live in such a system where you need money to make money.. So you kind of need a loan, in most cases, to start a business.

reply to post by Edrick


Hrm, regarding the mortgages, I do not know. That's a good question, and the worst case scenario is that the fed accepted them as collateral at a very high premium. That would be another good reason to look into the balance sheet of the fed. This is all speculation on my part, btw. Don't take it too seriously, because it's just a guess in the dark.


The mortgages could have also been sold off.. orrrr.. something. I really don't know. The way they were packaged, the mortgages were bundled together and worked kind of like a bond, but they weren't necessarily bonds.

So after they went belly up, I'm not sure what happened to the people who bought them. I guess they just didn't get paid, and they probably did not receive any collateral (the house) either. There were insurance policies you could buy to hedge against your mortgage securities going belly up. AIG wrote hundreds of billions of dollars worth of them -- knowing they could never pay them, should the market take a really bad turn.. which it did. So we bailed them out.

Originally posted by GreenBicMan
reply to post by Edrick

 

We didnt bail out Lehman, they failed brother.

Oh, you didn't? www.abovetopsecret.com...

reply to post by Kaytagg


You began this thread by asking 'why do you hate the fed?' I believe I, and others, have answered this query with questions of our own, that i feel remain unanswered.

Econo-babble aside, I have not once heard the proponents of a private central bank with the monopoly over issuance of currency, (which is explicitly forbade in your consitution)(and a main plank of communism) explain exactly WHY anyone in any country should be compelled to PAY for the use of their currency?

If you type in the word 'GREENBACK' into any search engine, you will find that in the short history of the USA, an INTEREST FREE currency has been used by your nations greatest leaders with great success in the past, as it removes the middle man that is the private central banks. This free currency was one of the main causes of the revolution, (Benjamin Franklin)and was reinstated by Lincon who was ASSASINATED, and also by JFK, who issued 5B in GREENBACKS (interest free currency issued by the TREASURY and not the FED) who was also ASSASINATED shortly after its issuance.(JFKS GREENBACKS remaind in cirulation until the mid 90s, INTEREST FREE)

So we have told you why we HATE the fed, and yes we do, those of us educated in history, and we hate any central banking scheme like it. Just as Andrew Jackson hated his version of the Fed, and defeated it in his time. (Andrew Jacksons campaign slogan was 'Jackson and no Bank', and his last word were "I BEAT THE BANK!" referring to his victory over the Fed of his day)

We have answered your question, so I ask you: WHY do you support such and entity that your own constitution, that your forefathers, that your greatest presidents opposed, to the DEATH? why is it ok that you and your fellow americans are forced into debt SLAVERY by a private corperation that is expressly forbade by your own constitution? In short, why should you pay for the use of your OWN MONEY, while other alternatives not only exist, but are intended by your constitution, and have been so sucessful in the past?

I dont want to hear anything about fixed bond rates or anything else. Answer the question directly: Why should anyone pay for the use of their OWN MONEY?

[edit on 3-4-2010 by Neo_Serf]

Quote from Carroll Quigley


"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

Carroll Quigley quotes:
For the first time in its history, Western Civilization is in danger of being destroyed internally by a corrupt, criminal ruling cabal which is centered around the Rockefeller interests, which include elements from the Morgan, Brown, Rothschild, Du Pont, Harriman, Kuhn-Loeb, and other groupings as well. This junta took control of the political, financial, and cultural life of America in the first two decades of the twentieth century.

Carroll Quigley quotes:
The Council on Foreign Relations (CFR) is the American Branch of a society which originated in England... (and) ...believes national boundaries should be obliterated and one-world rule established. I know of the operations of this network because I have studied it for twenty years, and was permitted in the early 1960's to examine its papers and secret records. … I believe its role in history is significant enough to be known.

"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, 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 the wealth is aggregated in a few hands, and the Republic is destroyed. I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of war"

Abaham Lincon

Andrew Jackson quotes:
The bold effort the present (central) bank had made to control the government ... are but premonitions of the fate that await the American people should they be deluded into a perpetuation of this institution or the establishment of another like it.

Andrew Jackson quotes:
I am one of those who do not believe that a national debt is a national blessing, but rather a curse to a republic; inasmuch as it is calculated to raise around the administration a moneyed aristocracy dangerous to the liberties of the country.

Andrew Jackson quotes:
You are a den of vipers and thieves. I intend to rout you out, and by the grace of the Eternal God, will rout you out.

Andrew Jackson quotes:
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.

9th Circuit Court, quotes about Banking:
... we conclude that the [Federal] Reserve Banks are not federal ... but are independent privately owned and locally controlled corporations... without day to day direction from the federal government.

Famous Quotes and Quotations about Banking

Banking Quotes 1-50 out of 147
Next 50 Banking quotes>>

9th Circuit Court, quotes about Banking:
... we conclude that the [Federal] Reserve Banks are not federal ... but are independent privately owned and locally controlled corporations... without day to day direction from the federal government.
more 9th Circuit Court quotes
Lord Acton, quotes about Banking:
The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.


John Adams, quotes about Banking:
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.

Major L. L. B. Angus, quotes about Banking:
The modern Banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banks can in fact inflate, mint and unmint the modern ledger-entry currency.

H. L. Birum, Sr., quotes about Banking:
The Federal Reserve Bank is nothing but a banking fraud and an unlawful crime against civilization. Why? Because they "create" the money made out of nothing, and our Uncle Sap Government issues their "Federal Reserve Notes" and stamps our Government approval with NO obligation whatever from these Federal Reserve Banks, Individual Banks or National Banks, etc.

Napoleon Bonaparte, quotes about Banking:
When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.

Boston Federal Reserve Bank, quotes about Banking:
When you or I write a check there must be sufficient funds in our account to cover that check, but when the Federal Reserve writes a check, it is creating money.

Keith Bradsher, quotes about Banking:
In a small Swiss city sits an international organization so obscure and secretive....Control of the institution, the Bank for International Settlements, lies with some of the world's most powerful and least visible men: the heads of 32 central banks, officials able to shift billions of dollars and alter the course of economies at the stroke of a pen.
more Keith Bradsher quotes

Major General Smedley Darlington Butler, quotes about Banking:
I wouldn't go to war again as I have done to protect some lousy investment of the bankers. There are only two things we should fight for. One is the defense of our homes and the other is the Bill of Rights. War for any other reason is simply a racket.
more Major General Smedley Darlington Butler quotes

Major General Smedley Darlington Butler, quotes about Banking:
War is just a racket. A racket is best described, I believe, as something that is not what it seems to the majority of people. Only a small inside group knows what it is about. It is conducted for the benefit of the very few at the expense of the masses.
more Major General Smedley Darlington Butler quotes

Please address the wisdom of your forebearers. Were they wrong?

Originally posted by Kaytagg
reply to post by sourdiesel

 

It also says "To borrow money on the credit of the United States."

So, lets pretend that the fed is private, and lending out money at interest to the US. That's still perfectly legal.

In reality, though, the fed isn't private, however it is run independent of the executive branch (afaik). Meaning, Obama can't walk over to the Fed and dictate monetary policy. He and the congress can, however, i believe, impeach the head of the fed, if they want.

Any extra money the fed makes goes back to the treasury, so it's not like they're collecting taxes and giving it to themselves.

The whole idea that some private banker owns the fed, and is lending money to the US, then collecting it all back + extra and keeping it for himself is completely ridiculous.

Before addressing the equivocation that comes with combining Congress' authority to "borrow money on the credit of the United States", with its mandate to "To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures", it might be prudent to first address this remark:

So, lets pretend that the fed is private, and lending out money at interest to the US. That's still perfectly legal.

I would suggest that it serves no purpose to pretend at all when we can look to the source to discover the reality of who owns the Federal Reserve. In their own words from their own web site, the Federal Reserve has this to say:

Who owns the Federal Reserve

The Federal Reserve System is not "owned" by anyone and is not a private, profit-making institution. Instead, it is an independent entity within the government, having both public purposes and private aspects.

It should be noted first, in order to remind anyone accusing those who oppose the existence of a Federal Reserve, how willing that organization is to engage in semantics. Why the Federal Reserve in their own website feels compelled to place quotation marks around the word owned is not so clear at this point, and requires more investigation, since it apparently hopes to qualify in some way what it is meant by "owned", and since that is the case it is also prudent to define "owned" in its common usage.

Owned is the past tense verb of own, and to own quite simply defined is either of or belong to oneself or itself, or that which belongs to one, and what must be considered when the Federal Reserve qualifies "owned", is if they are attempting to distinguish between transitive verbs as opposed to intransitive verbs, or perhaps the other way around.

As a transitive verb, own, or owned, means to have or possess property, and to have control over. As an intransitive verb has no objects in relation to a subject and the usage of the word is related only to the subject. In other words if the word owned used in its common usage, is used as a transitive verb then it means someone owns something, but as an intransitive verb it means someone is responsible for or independent from outside control.

Of course, besides the two uses of verb tenses, it should be considered that perhaps there is some statutory definition to the word own or "owned" and this would explain why the Federal Reserve felt compelled to place the word in quotations. It should be also considered textually and considered what is meant by "independent" entity within the government, having both public purposes and private aspects. As to that "independence" claimed by the Federal Reserve, they explain it as such:

As the nation's central bank, the Federal Reserve derives its authority from the U.S. Congress. It is considered an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government, it does not receive funding appropriated by Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms. However, the Federal Reserve is subject to oversight by Congress, which periodically reviews its activities and can alter its responsibilities by statute. Also, the Federal Reserve must work within the framework of the overall objectives of economic and financial policy established by the government. Therefore, the Federal Reserve can be more accurately described as "independent within the government."

Reading this explanation, and keeping in mind the difference between transitive and intransitive verbs it would appear as if the Federal Reserve is telling us that Congress is ultimately responsible, (intransitive), for the creation and oversight of the Federal Reserve, which beyond that oversight, the Federal Reserve then claims a certain amount of ownership, used as an intransitive verb, in that they claim independent authority to dictate policy, short of legislation prohibiting that policy. What should be noted is that this explanation fairly defines any law abiding citizen of a state within the Union, who also must work within the framework of the overall objectives of economic and financial policy established by the government, and so they too would be more accurately described as independent within the government.

Thus, just as you or I are independent and own our own bodies, subject only to lawful legislation, so to is the Federal Reserve, who are independent and own their own bodies. This is further evidenced by the Federal Reserves next paragraph following the one just quoted:

The twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation's central banking system, are organized much like private corporations--possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.

This is what the Federal Reserve has to say about themselves, but consider what The Bank for International Settlements, has to say about the Federal Reserve in a report written by Richard Cooper titled: Almost a century of bank cooperation:

"From the beginning the Federal Reserve of the United States had a peculiar status. Although created by legislation in 1913, it is technically owned by its member banks which appoint 72 of its 108 regional bank directors, who in turn select the regional bank presidents, (subject to approval by the Board of Governors in Washington), who in turn participate in framing monetary policy. The seven Governors are appointed by the President of the United States, subject to confirmation by Senate, for 14 year non renewable terms, with the chairman appointed for a renewable four year term. Originally the Secretary of the Treasury and the Comptroller of the Currency, both public officials, sat as ex officio members of the Board of Governors, but that provision was eliminated in 1934 the Federal Reserve thus remains a curious hybrid, a privately owned, quasi-public institution, whose sole function is central banking (including bank regulation and supervision)."

(Emphasis added, text of Cooper's report also found here, pages 6 and 7.)

To further illustrate this privately owned "quasi-public", agency known as the Federal Reserve, consider their own words when describing their responsibilities:

Today, the Federal Reserve's responsibilities fall into four general areas:

* conducting the nation's monetary policy by influencing money and credit conditions in the economy in pursuit of full employment and stable prices

* supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers

* maintaining the stability of the financial system and containing systemic risk that may arise in financial markets

* providing certain financial services to the U.S. government, to the public, to financial institutions, and to foreign official institutions, including playing a major role in operating the nation's payments systems

(Emphasis added)

What should be noted first is how the Federal Reserve is under the impression the U.S. government is a separate entity than that of the public, and implicitly, and secondly, that they are as well. There is much more to consider, but space is limited and it must be continued in the next post.

Continued...

reply to post by Kaytagg


Continuing...

The whole idea that some private banker owns the fed, and is lending money to the US, then collecting it all back + extra and keeping it for himself is completely ridiculous.

Ridiculous? Let us continue to investigate. What do we know about the Federal Reserve so far? We know it consists of a Board of Governors, that are composed of seven members appointed by the President, with the advice and consent of the Senate, where the terms of these members are fourteen years and staggered so they do not coincide with Presidential terms, preventing any dominance by a President, over the Federal Reserve, by stacking the Board.

Federal Reserve Act

Section 10. Board of Governors of the Federal Reserve System

1. Appointment and Qualification of Members
The Board of Governors of the Federal Reserve System (hereinafter referred to as the "Board") shall be composed of seven members, to be appointed by the President, by and with the advice and consent of the Senate, after the date of enactment of the Banking Act of 1935, for terms of fourteen years except as hereinafter provided, but each appointive member of the Federal Reserve Board in office on such date shall continue to serve as a member of the Board until February 1, 1936, and the Secretary of the Treasury and the Comptroller of the Currency shall continue to serve as members of the Board until February 1, 1936. In selecting the members of the Board, not more than one of whom shall be selected from any one Federal Reserve district, the President shall have due regard to a fair representation of the financial, agricultural, industrial, and commercial interests, and geographical divisions of the country. The members of the Board shall devote their entire time to the business of the Board and shall each receive an annual salary of $15,000, payable monthly, together with actual necessary traveling expenses.

[12 USC 241. As amended by acts of June 3, 1922 (42 Stat. 620); Aug. 23, 1935 (49 Stat. 704). Prior to the enactment of the Banking Act of 1935, approved Aug. 23, 1935, the Board of Governors of the Federal Reserve System was known as the Federal Reserve Board. See note to the third paragraph of section 1. The portion of this paragraph dealing with salaries of Board members has in effect been amended numerous times, most recently by Executive Order. Prior to the act of December 27, 2000, section 1002 of which revised the executive schedule, the salary of the chairman of the Board was set at executive schedule level 2 and the salary of other members at level 3. The salary of the chairman of the Board is now set at executive schedule level I, and the salary of other members at level II (see 2 USC 358 and 5 USC 5313 and 5314).]

The emphasis for the title and subtitle is theirs, I added emphasis to the clause dictating the President to select a Board membership that reflects a fair cross section of the national economy, of which is virtually ignored today, as most members are almost exclusively from the banking industry.

Continuing with this investigation of what exactly this privately owned, "quasi-public", organization is, we must take a look at the Federal Reserve Banks, of which there are twelve based in these cities:

Atlanta
Boston
Chicago
Cleveland
Dallas
Kansas City
Minneapolis
New York
Philadelphia
Richmond
San Francisco
and St. Louis

These twelve regional banks are corporations with stock owned by commercial banks, because by law, in order to be a member of the system one must hold stock in the regional bank of which they are a member. Thus, private banks own stock in one or more regional Federal Reserve Banks, which are a not for profit, corporation. Those commercial banks who have become members are now eligible to elect direct directors of the Regional Reserve Bank they are a member, and while larger banks can hold more shares than smaller ones, all only get one vote when choosing directors.

Each regional bank has nine Directors, each divided by three into Class A, Class B, and Class C Directors who represent the banking industry, the general public and the national Board of Governors, respectively. Understanding this, it is advisable at this point to come to know and understand a third component of the Federal Reserve known as the Federal Open Market Committee, (FMOC), which consists of the Board of Governors, and five of the twelve regional presidents, where a revolving system allows all nine regions a chance to participate, (with one exception, that being New York who enjoys the same privilege as the Board of Governors), and whose function is to implement monetary policy set by the national Board, yet seemingly holds a fair amount of autonomy on its own.

The term "monetary policy" refers to the actions undertaken by a central bank, such as the Federal Reserve, to influence the availability and cost of money and credit to help promote national economic goals. The Federal Reserve Act of 1913 gave the Federal Reserve responsibility for setting monetary policy.

www.federalreserve.gov...

Take serious note of what follows the above quoted paragraph from the Federal Reserve as they carefully explain how they go about manipulating the money supply and interest rates by buying or selling government securities, doing the same by the sale and purchase of other governments securities as well.

The Federal Reserve controls the three tools of monetary policy--open market operations, the discount rate, reserve requirements. The Board of Governors of the Federal Reserve System is responsible for the discount rate and reserve requirements, and the Federal Open Market Committee is responsible for open market operations. Using the three tools, the Federal Reserve influences the demand for, and supply of, balances that depository institutions hold at Federal Reserve Banks and in this way alters the federal funds rate. The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight.

Changes in the federal funds rate trigger a chain of events that affect other short-term interest rates, foreign exchange rates, long-term interest rates, the amount of money and credit, and, ultimately, a range of economic variables, including employment, output, and prices of goods and services.

Thus the Federal Reserve, through a three pronged system of a Board of Directors, Regional Reserve Banks and a Federal Open Market Committee, control the rates of interest through money manipulation, and are able to purchase government securities when interest rates are low by creating money, and selling government securities when they are high, through the extermination of money.

Pay close attention to how this:

The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight.

and this:

Changes in the federal funds rate trigger a chain of events that affect other short-term interest rates, foreign exchange rates, long-term interest rates, the amount of money and credit, and, ultimately, a range of economic variables, including employment, output, and prices of goods and services.

Serve to explain how policy is formulated every day, down to the minute, and how how their intervention affects immediate changes in the markets. The Federal Reserve is neither private nor public it is as Cooper said it was a curious hybrid of both, where private banks purchase membership stock in order to elect regional Directors to Regional Reserve Banks, who in turn select presidents who serve on the Federal Open Market Committee that controls the economy of the United States for America, through immediate interventions upon the whims of its directors and presidents all working for private bank members, which for all intents and purposes, is a cartel.

A cartel comprised of private banks who manipulate money and interest rates, affecting the U.S. economy with the snap of a finger. This is the reality of the Federal Reserve, and money supply system that was entrusted to Congress, now "delegated" to a curious hybrid of a system where a privately owned quasi-public organization works "within" the government to affect economic policy. It is a system antithetical to free market advocates, and is an undeniably artificial intrusion into the market. This private/quasi-public nature of the Federal Reserve, coupled with its control on the markets, is just one reason so many people oppose the existence of this sort of centralized banking system.

However, you asked for citations and for elaboration on fiat money and how this "enslaves" the people, so I must end this post here, and continue with yet another.

Continuing...

reply to post by Kaytagg


Continuing...

The Federal Reserve system was primarily based upon the Aldrich Plan drafted by Nelson Aldrich, (the very same one who drafted the 16th Amendment), with minor changes made as concessions to Democrats who wanted more public control than was originally designed by Aldrich.

The chief of the bipartisan National Monetary Commission was financial expert and Senate Republican leader Nelson Aldrich. Aldrich set up two commissions—one to study the American monetary system in depth and the other, headed by Aldrich himself, to study the European central-banking systems and report on them.[21] Aldrich went to Europe opposed to centralized banking, but after viewing Germany's monetary system he came away believing that a centralized bank was better than the government-issued bond system that he had previously supported.

Centralized banking was met with much opposition from politicians. Critics were suspicious of a central bank, and charged that Aldrich was biased due to his close ties to wealthy bankers such as J.P. Morgan and his daughter's husband John D. Rockefeller, Jr. Aldrich fought for a private bank with little government influence, but conceded that the public sector should be represented on the Board of Directors. Most Republicans favored the Aldrich Plan,[26] but it lacked enough support in Congress to pass because rural and western states viewed it as favoring the "eastern establishment."[5] In contrast, progressive Democrats favored a reserve system owned and operated by the government; they believed that public ownership of the US's central bank would end Wall Street's control of the American currency supply.[26] Conservative Democrats fought for a privately owned, yet decentralized, reserve system, which would still be free of Wall Street's control.[26]

The Federal Reserve Act passed Congress in late 1913[27][28] on a mostly partisan basis, with most Democrats voting "yea" and most Republicans voting "nay."[29] The final Act most closely resembled the Aldrich plan, but more control was given to the public sector.[5][29]

Understanding the Aldrich Plan, the opposition to that plan and the actual Federal Reserve Act that followed mean also understanding the history of central banking in the Untied States as well.

Some Founding Fathers were strongly opposed to the formation of a central banking system; the fact that England tried to place the colonies under the monetary control of the Bank of England was seen by many as the 'last straw' of English oppression and that it led directly to the American Revolutionary War. Other Founding Fathers were strongly in favor of a central bank. Robert Morris, as Superintendent of Finance, helped to open the Bank of North America in 1782, and has been accordingly called by Thomas Goddard "the father of the system of credit, and paper circulation, in the United States." As ratification in early 1781 of the Articles of Confederation & Perpetual Union had extended to Congress the sovereign power to emit bills of credit, it passed later that year an ordinance to incorporate a privately subscribed national bank following in the footsteps of the Bank of England. However, it was thwarted in fulfilling its intended role as a nationwide central bank due to objections of "alarming foreign influence and fictitious credit," favoritism to foreigners and unfair competition against less corrupt state banks issuing their own notes, such that Pennsylvania's legislature repealed its charter to operate within the Commonwealth in 1785.

How the First Bank of The United States only controlled 20% of the currency supply, while state banks accounted for the rest:

In 1791, a former aide to Morris, Alexander Hamilton, the Secretary of the Treasury, made a deal to support the transfer of the capital from Philadelphia to the banks of the Potomac in exchange for southern support for his Bank project. As a result, the First Bank of the United States (1791-1811) was chartered by Congress in that same year. The First Bank of the United States was modeled after the Bank of England and differed in many ways from today's central banks. For example, it was partly owned by foreigners, who shared in its profits. Also, it wasn't solely responsible for the country's supply of bank notes. It was responsible for only 20% of the currency supply; state banks accounted for the rest. Several founding fathers bitterly opposed the Bank. Thomas Jefferson saw it as an engine for speculation, financial manipulation, and corruption.

the history of the Second Bank of The United States that arose from the ashes of the First:

After a five-year interval, the federal government chartered its successor, the Second Bank of the United States (1816-1836). It was basically a copy of the First Bank, with branches across the country. Andrew Jackson, who became president in 1828, denounced it as an engine of corruption that benefited his enemies. His destruction of the bank was a major political issue in the 1830s and shaped the Second Party System, as Democrats in the states opposed banks and Whigs supported them.

Understanding the Bank War that ensued:

The Bank War is the name given to the controversy over the Second Bank of the United States and the attempts to destroy it by then-president Andrew Jackson. At that time, it was the only nationwide bank and, along with its president Nicholas Biddle, exerted tremendous influence over the nation's financial system. Jackson viewed the Second Bank of the United States as a monopoly since it was a private institution managed by a board of directors, and in 1832 he vetoed the renewal of its charter.

Understanding the history of the "free banking period" otherwise known as the "wildcat banking" era between 1837-1862, understanding the National Banking Act as a consequence of the Civil War, and finally the Panic of 1907 that directly led to the creation of the Federal Reserve.

The main motivation for the third central banking system came from the Panic of 1907, which renewed demands for banking and currency reform.[19] During the last quarter of the 19th century and the beginning of the 20th century the United States economy went through a series of financial panics.[20] According to proponents of the Federal Reserve System and many economists, the previous national banking system had two main weaknesses: an "inelastic" currency, and a lack of liquidity.[20] The following year Congress enacted the Aldrich-Vreeland Act, which provided for an emergency currency and established the National Monetary Commission to study banking and currency reform.[21] The American public believed that the Federal Reserve System would bring about financial stability, so that a panic like the one in 1907 could never happen again; but just twenty-two years later in 1929, the stock market crashed again, and the United States entered the worst depression in its history, the Great Depression. Some economists including Milton Friedman,[22] Thorstein Veblen,[23] Ben Bernanke,[24] Robert Latham Owen, John Kenneth Galbraith and Murray Rothbard[25] believe that the Federal Reserve System helped to cause the Great Depression.

Take note how current Federal Reserve Chairman Ben Bernanke is listed as one of those who believes it was the Federal Reserve, a system established to create financial stability, and prevent panics such as the one in 1907, actually caused The Great Depression! In Bernanke's own words, from a speech given on November 8th of 2002, honoring Milton Friedman. In concluding his speech, Bernanke says:

The brilliance of Friedman and Schwartz's work on the Great Depression is not simply the texture of the discussion or the coherence of the point of view. Their work was among the first to use history to address seriously the issues of cause and effect in a complex economic system, the problem of identification. Perhaps no single one of their "natural experiments" alone is convincing; but together, and enhanced by the subsequent research of dozens of scholars, they make a powerful case indeed.

For practical central bankers, among which I now count myself, Friedman and Schwartz's analysis leaves many lessons. What I take from their work is the idea that monetary forces, particularly if unleashed in a destabilizing direction, can be extremely powerful. The best thing that central bankers can do for the world is to avoid such crises by providing the economy with, in Milton Friedman's words, a "stable monetary background"--for example as reflected in low and stable inflation.

Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again.

Bernanke's speech is well worth reading as it serves as a simple, brief, yet illuminating history of economics in the U.S. Unfortunately, once again I am out of space and must continue...