Yes I know, another thread on the Fed. I would like to apologize upfront for the somewhat jumpy nature of this post. This has been a work in progress
for over a few months and due to the wealth of information it is difficult to maintain one big storyline. However, I hope this information can be a
starting point for many more threads by other contributors. Also, some of the numbers may be a little old, but accurate within 3-4 months. I welcome
any constructive criticism and correction of any errors i may have made.
The Occurrence of Debt
“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, will deprive the people of
all property until their children wake-up homeless on the continent their fathers conquered. “ Thomas Jefferson
Purpose
The following are the purposes of this document:
•
Understand what we could do with $7 Trillion and why would we ask that?????
• Understand the idea of usury (debt)
• To understand how money is created
• Understand the idea of modern banking (fractional reserve banking)
• Understand the idea of central banks and the Federal Reserve
• Understand the relationship between fiat currency and coined currency
• To understand why our current system needs to be changed
With this article I intend to help people understand how our current economic system works and the implications it means for us. In this day and age,
it is virtually impossible, even for foreign countries, to not be effected by, and somewhat dependent on the US economy. With a better understanding
of our banking system it is my hope that we can start making positive change towards a system that is a more conducive environment for progressive
action. People should understand this system, what it can do legally, and what legal power we have as citizens. I will be discussing the concept of
Central Banks and our current one, the Federal Reserve. I will be discussing Fractional Reserve Banking, how it works, how it can be a tool for great
profit, but also great loss to banks. The topic of fiat currency will also be addressed and how it different from real currency with intrinsic value.
I will also go over how fiat currency can hurt us, and makes corruption easier. And at the end I will go over our options of what we can do, to
create a better economy.
“The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the
buying power of consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master
and become the servant of humanity.”
-President Abraham Lincoln
Central Banks and the Federal Reserve
The idea of Central Banking originated in England, where the first central bank, The Bank of England, was established in 1694 . The bank was created
to help King William III out of his government’s financial crisis. At the time, banks could print their own money, which resulted in a number of
different currencies being printed. With their current technology, it was difficult to maintain the stability of the money system, due to each
currency type being worth different values. The idea of the central bank was to have one institution printing uniform currency, in which the entire
nation and populace would honor. In the beginning, central banks were typically limited to this type of activity, however, as we will see, this class
of people continued to pursue more power. The current definition, as offered by Google, a Central Bank Is defined as:
“A central bank, reserve bank, or monetary authority is a banking institution granted the exclusive privilege to lend a
government its currency”
– google.com
This definition deserves close scrutiny if one wishes to fully understand how this system works. In the definition it says a central bank has
“the exclusive privilege to lend a government its currency”. From this we can extrapolate that A central bank(Federal Reserve), has the
exclusive right to loan(read interest) our government its money supply. One has to wonder how you would get the exclusive right to loan a government
its currency? And why exactly would a government need to be loaned currency, Couldn’t they just print their own?
Loan : The act of lending, giving permission to use, lending money with interest.
Credit : Is the provision of resources by one party to another party where that second party does not reimburse the first party immediately,
thereby generating a debt, but instead arranges either to repay or return those resources at a later date.
Usury: The charging of interest on loans; this included charging a fee for the use of money or currency.
Money: Any money declared by a government to be legal tender, State-issued money which is neither legally convertible to any other thing,
nor fixed in value in terms of any objective standard. Coins and paper money that do not have metal value or are not backed up by metal value. (Faith
Based Money)
So does the United States have a Central Bank? The answer unsurprisingly is yes, our central bank is called the Federal Reserve. The Federal Reserve
was written into law in 1913 with the Federal Reserve Act signed by President Woodrow Wilson. The Federal Reserve System is composed of the
presidentially appointed Board of Governors, the Federal Open Market Committee, twelve regional Federal Reserve Banks located in major cities
throughout the nation, numerous other private U.S. member banks and various advisory councils. The Federal Reserve is in charge of creating our
currency which it loans to our government, and charges a usury fee to use it. Despite its name, the Federal Reserve is not a Federal organization.
The Federal Reserve is actually a private for profit banking corporation. As noted within the Federal Reserve’s website, they pay a
6 percent dividend to member banks and investors. This 6 percent dividend
comes from the interest paid on the debt we owe the Federal Reserve and pay through our income tax.
"The regional Federal Reserve banks are not government agencies. ...but are independent,
privately owned and locally controlled corporations." Lewis vs. United States, 680 F. 2d 1239
9th Circuit 1982
The History of Central Banking in the US
The US has had a long history of experimenting with Central Banks. The first U.S. institution with central banking responsibilities was the First
Bank of the United States, chartered by Congress and signed into law by President George Washington on February 25, 1791. This was done despite strong
opposition from Thomas Jefferson and James Madison. The charter was for twenty years and expired in 1811 under President James Madison, because
Congress refused to renew it. In 1816, however, Madison revived it in the form of the Second Bank of the United States. Early renewal of the bank's
charter became the primary issue in the reelection of President Andrew Jackson. After Jackson, who was opposed to the central bank, was reelected, he
pulled the government's funds out of the bank. Nicholas Biddle, President of the Second Bank of the United States, responded by contracting the money
supply to pressure Jackson to renew the bank's charter forcing the country into a recession, which the bank blamed on Jackson's
policies.
LINK
"From now on, depressions will be scientifically created." Congressman Charles A.
Lindbergh Sr. , 1913
The last line is highlighted to show the significance of this action. Rather than submit to the will of the people, the central bankers would rather
use their institution as an economic weapon, to persuade the course of the country. These are not the actions of a benevolent institution, but rather
the actions of a predatory institution, which uses it power and influence to pursue their own interest instead of the people they are to help. The
following article and research puts this into perspective.
Politicians share personality traits with serial killers: Study
“Kouri notes… criminals are psychologically capable of committing their dirty deeds free of any concern for social, moral or legal
consequences and with absolutely no remorse. This allows them to do what they want, whenever they want”. "Ironically, these same traits exist
in men and women who are drawn to high-profile and powerful positions in society including political officeholders. "
"Give me control of a nation's money and I care not who makes the laws." -Mayer Amschel Rothschild
Our current Central Bank is called the Federal Reserve. It was created in 1913, through the Federal Reserve Act, which was championed by then Senator
Nelson Aldrich. But where did the idea originate to go back to a Central Bank? A concept that had already failed twice in the US! In the book
“The Creature from Jekyll Island”, by Edward Griffen, we can see a glimpse of where this
system originated. This act was put forth at a private meeting on Jekyll Island, a meeting place for the rich and affluent, by roughly seven people.
1. Nelson W. Aldrich, Republican "whip" in the Senate, Chairman of the National Monetary Commission.
2. Frank A. Vanderlip, president of the National City Bank of New York, representing William Rockefeller and the international investment banking
house of Kuhn, Loeb & Company.
3. Abraham Piatt Andrew, Assistant Secretary of the United States Treasury.
4. Henry P. Davison, senior partner of the J.P. Morgan Company.
5. Charles D. Norton, president of J.P. Morgan's First National Bank of New York.
6. Benjamin Strong, head of J.P. Morgan's Bankers Trust Company.
7. Paul M. Warburg, a partner in Kuhn, Loeb & Company, a representative of the Rothschild banking dynasty
in England and France, and brother to Max Warburg who was head of the Warburg banking consortium in Germany and the Netherlands.
However, Aldrich's bill met much opposition from politicians and critics who were suspicious of the idea of a central bank. Furthermore, Aldrich was
accused of being biased due to his close ties to wealthy bankers such as J. P. Morgan and John D. Rockefeller Jr, his
son-in-law.
The Federal Reserve Members will be returning to Jekyll Island to celebrate and honor 100 years of existence.
www.businessinsider.com...
What does it mean that our current economic system was written by bankers and championed by their relatives in the government? Can we trust these
people to create a system that is fair and operates under the auspices of being a benefit for everyone? Do we have any reason not to trust these
people? Here is something interesting to consider when asking these questions.
“Wall Street firms aren't the only banks that had a banner year. The Federal Reserve made record profits in 2009, as its unconventional
efforts to prop up the economy created a windfall…Much of the higher earnings came about because of the Fed's aggressive program of buying bonds,
aiming to push interest rates down across the economy and thus stimulate growth. By the end of 2009, the Fed owned $1.8 trillion in U.S. government
debt and mortgage-related securities, up from $497 billion a year earlier. This shows that central banking is a great business to be in, especially
in a crisis, said Vincent Reinhart, a resident scholar at the American Enterprise Institute and a former Fed official.”
Vincent Reinhart
Now, during what is considered the worst depression since the Great Depression, why is the Federal Reserve posting “record profits”? What this
shows, and is important to understand is that, whether the economy does good or bad, the Federal Reserve will still generate a profit. And even though
a portion of this profit goes to the US treasury, this money is still spent on paying off interest on bonds and treasury notes. As of late, it almost
seems that the worse our economy gets, the higher the profits of this system.
If you find this interesting, I would recommend reading “The Shock Doctrine” by Naomi
Klein. This is an interesting expose on the economic policies of Milton Friedman, who some call the godfather of economics and the aptly named idea of
Disaster Capitalism: “using the public’s disorientation following massive collective shocks – wars, terrorist attacks, or natural disasters --
to achieve control by imposing economic shock therapy.”
Only a crisis, real or perceived, produces real change.-Milton Friedman
How is money and debt created?
For this, I will use a real life example that we all witnessed recently. In 2009 the US went through a series of Tax payer funded bailouts that were
designed, some argued, to save the US/World economy. The two bailouts I will talk about is the $700 Billion Bank bailout, and the $400 Billion Bailout
of Fannie Mae and Freddie Mac. To keep this simple, we will say $1 Trillion instead of $1.1 Trillion. In reality, the fed has promised up to $12
Trillion in total bailouts which would bring us past our current debt limit of $14.3 Trillion.
Obama Admin confident Congress
will raise debt limit
1. The US Treasury prints off $1 Trillion worth of Treasury Bonds.
These Bonds are considered an investment, as they pay out interest, on top of the actual initial value of the bond. So these $1 Trillion in bonds are
actually worth $1.05 – $1.1 Trillion over the following years(depends on rate and term).
2. The US treasury contacts the Federal Reserve and tells them we need $1 Trillion more dollars.
3. The Federal Reserve prints off $1 Trillion worth of Reserve Notes.
4. The Federal Reserve then buys the $1 Trillion in Bonds with the newly printed $1 Trillion in Reserve Notes.
5. The US Government/Treasury can now utilize this money. In this case, $700 B went into Bank of America and $400 B went into Fannie and Freddie.
6. The US Treasury and US taxpayers are now liable to pay off the money owed by these Bonds. The only problem is, we only borrowed $1 Trillion, but we
owe more due to the interest. So how could we possibly pay it off? Well under our current system, we just go back to step 1 and borrow more money.
When we walk through the steps “necessary” for money to be created, it is easy to realize just how the scam works. No matter how much money we
borrow from the Federal Reserve, WE WILL ALWAYS OWE THEM MORE, due to interest. If you do the research, you will see that nearly every country on this
planet is in debt.
Countries by Debt - Public
List of countries by Debt - External
But why are we in debt, and to whom? Doesn't it seem strange countries do not print their own debt free money?
While researching I also found something new which I was unaware of called seigniorage. To give some history, during the civil war, President Lincoln
issued a new type of currency called the United States Notes or
Greenbacks that was not linked to
the central banks and was interest free for the benefit of the citizens. There is some speculation that he was assassinated for this.
"
The difference between a United States Note and a Federal Reserve Note is that a United
States Note represented a "bill of credit" and was inserted by the Treasury directly into circulation free of interest. Federal Reserve Notes are
backed by debt purchased by the Federal Reserve, and thus generate seigniorage for the Federal Reserve System, which serves as a lending intermediary
between the Treasury and the public."
"Ordinarily
seigniorageis only an interest-free loan (for instance of gold) to the issuer of the
coin or paper money. When the currency is worn out, the issuer buys it back at face value, thereby balancing exactly the revenue received when it was
put into circulation, without any additional amount for the interest value of what the issuer received. Currently, under the rules governing monetary
operations of major central banks (including the central bank of the USA), seigniorage on bank notes is simply defined as the interest payments
received by central banks on the total amount of currency issued. This usually takes the form of interest payments on treasury bonds purchased by
central banks, putting more dollars into circulation. However, if the currency is collected, or is otherwise taken permanently out of circulation, the
back end of the deal never occurs (that is, the currency is never returned to the central bank). Thus the issuer of the currency keeps the whole
seigniorage profit, by not having to buy worn out issued currency back at face value."
"The Federal Reserve bank buys government bonds without one penny."-Congressman Wright Patman, Congressional Record, Sept 30, 1941
Fractional Reserve Banking
Another interesting thing our bank can do is called
Fractional Reserve Banking which is really just funny math. In simple terms, for every
single physical dollar a bank has deposited within it, that bank can then loan out up to $10 from that single Dollar. When the Government infused $700
Billion into BoA, they were given the ability to loan out up to $7 Trillion AT PROFIT thanks to the tax-payer bailout. However, even though we bailed
them out, we still have to pay them profit to borrow our money back. What was most important is that these lending institutions were able to continue
loaning out money, generating profit, and expanding the economy. In fact, there is a reason why we always here so much about the economy and whether
or not it is growing. When the economy grows, the effects arent as bad as when the economy shrinks. However we cannot continue to grow forever in this
current form.
Fiat Wealth Vs Real Wealth
In order to get a loan, especially for a mortgage, one must offer up collateral. This is something you offer to the lender, in the chance you cannot
repay the loan. Almost every type of loan will require some form of collateral.
Say you experienced hard economic times and were unable to repay the loan. The bank would then require reimbursement or what you offered up as
collateral. And this is what people need to understand. By giving out a loan, the bank is essentially creating money out of thin air(Fractional
Reserve Banking), there is no real value to it. However, if you fail to repay that loan back, the bank will get to keep your REAL assets (vehicles,
jewelry, property), the rest of the loan, and any interest you paid them as well. These Assets have an intrinsic value associated with them.Think –
All profit, no responsibility.
Foreclosure Rates
The National Debt Clock - Important Link
I inserted a few of the trackable items below that I believe were important to point out
Notice the Unfunded Liabilities at the bottom. $111 TRILLION. The unfunded liabilities are securities the government has promised and is projected to
owe into the future. That means each taxpayer will have to pay slightly more than $1 million in taxes over their life time to sustain this. Have fun
at work tomorrow!
The national debt is credit or money owed by the US. This occurs when the government runs on a deficit, which means the government spends more than it
brings in, through revenue. In order to make up for the shortfall, the government prints bonds and securities and auctions them off. When not enough
money is raised at these auctions to cover the difference, the government will then in turn ask for help from the Federal Reserve.
How Much Do We Owe?
As it stands, our national debt stand roughly at 13.7 trillion dollars, which equates to 44k per
person, or
124k per tax payer. The current total interest owed on this debt is 3.2 trillion, or 10.5k per person. The current amount of
currency in circulation is 8.6 trillion.
Total future known US liabilities is valued at roughly 111.2 trillion dollars, or 1 million per taxpayer.
So a current tax-payer is estimated to owe roughly 140k. If we add up the known future liabilities the government has “promised”, each tax payer
can look forward to owing more than $1 Million over your life to sustain this system.
Credit Derivative- Stated in plain language, a credit derivative is a wager, similar
to placing a bet at the racetrack, where the person placing the bet does not own the horse or the track or have anything else to do with the race. The
person buying the credit derivative doesn't necessarily own the object of the wager. He simply believes that there is a good chance that the entity
in question will go to zero value. The cost might be as low as 1% per year. If the buyer of the derivative believes the underlying bond will go bust
within a year the buyer stands to reap a 100 fold profit. A small handful of investors anticipated the credit crunch of 2007/8 and made billions
placing "bets" via this method. What does it mean if we allow people to bet that a company will go down? Would that ever lead to people
intentionally try and destroy a business?
(Pre-Obama) Republican have put us in more debt than Democrats by almost double.
Who Do We Owe It Too?
The left side represents the top 10 entities we owe money to. The right side shows the total amount and proportion of debt owed to the public, the FR,
and foreign entities.
Other News of Interest
CNN Link
35 foreign banks bailed out by the Fed
Bloombergfears the US rescue may reach $24 Trillion
Mathematically impossible to pay off US debt?
Can we even pay off the debt? M2(the current money supply in existance) is estimated at only between $8-$9 Trillion. However our National Debt is
almost $14 Trillion. Meaning if the US took every single physical dollar bill we had, it would still not cover the entire cost of our debt. And the
only way to get more money, would be to borrow it from the fed, thus creating even more debt. It is now a MATHEMATICAL impossibility to pay off our
debt with physical cash.
Treasury Auction Bombs- Lender of last resort The
Fed buys up Debt
When the Fed infuses Cash into the economy-^ we experience inflation. Basically the new money must borrow its value from existing money. Since the
Federal Reserve Note was created it has lost over 98% of its value.
money.cnn.com...
In fact, when we count for inflation, the "average" American family is losing a battle when we consider Real wage gain versus inflation. The buying
power of the dollar is being eroded every day, at a rate faster than wages have been rising. The following is a graph from
Stanford University - Link
As you can see, even though the current dollar value has been steadily increasing(blue), when adjusted for inflation is has basically remained
stagnant. It is unfortunate that graph stops at 2000 as im sure the picture gets much worse after 2001.
Through the Treasury, Census, and other websites, the government provides a wealth of information if you wish to do some research of your own.
Be sure to check out these websites. They are the best resources and information contained in this post
www.usinflationcalculator.com...
A very easy tool to chart the value of money from 1913-today based on inflation.
Census.gov Historical Median Income Data 1967-2009
PDF
As you can see, the rich have been getting richer, and the poor are getting poorer.
At this point, I want to thank anyone that has made it this far. I have been slowly working up to my finale that I hope will have the most impact on
you.
Interest paid on the National Debt
So how much are we paying to sustain our deficit spending? I will warn you that is it very grim indeed.
Treasury.gov
So within the last 23 years, we have spent almost $8 Trillion dollars just on paying off the interest on the national debt. Just to make things clear,
this IS NOT paying off the National Debt, but merely paying off the interest generated by it. As it stand we are roughly $14 Trillion in debt and
within the last 23 years we have spent roughly half of that, just paying the interest.
What could we have done with that $7 Trillion dollars?
source 1
NY Times source 2
I put this image together, based on the above statistics, to show what we could have done with that money.
These statistics are based off of the current world population, and would not cover people born after necessarily.
However, the facts speak for themselves. I think if the US had invested this much internally and abroad, it would be hard to find people who would
still consider us enemies.
What can we do?
Although the debt outlook seems very gloomy now, there is still much we can do to improve our current system. For your typical citizen, just staying
out of debt is help enough, but what can we do on a fundamental level to fix this problem at the root? Here are a few ideas.
1. Stop running a deficit
2. Return to hard currency, or a hybrid of what we currently use.
Our current form of currency is called fiat currency. Which means it is paper money or legal tender. It is not backed by physical goods, which are
typically precious metals. The reason humans used coins made of precious metals for thousands of years, is due to the fact one could melt their coin,
and have a purified ore or mineral, which could then be used to make tools such as an arrow head. The point being, the coin itself had physical value,
in that it was a precious metal. When a country uses a fiat currency, corruption and crimes are easier to commit, as it is much easier to manipulate
the value of something on paper with tricky math, than to manipulate the value of a physical object. But what do I mean by tricky math?
3. Eliminate or reduce the proportion of Fractional Reserve Banking.
Fractional reserve banking is one of the tricky math abilities banks have to generate profit.
Basically, for every 1 physical dollar someone has saved/invested in a bank, that bank can then loan out 9 dollars, at interest, to the public or
other entities. So if a bank has a total of $10 Million in cash reserves, that bank can loan out $100 Million dollars, and charge a usury fee for it.
This is another example of banks just creating money, out of thin air, and generating profit for in essence, doing nothing but tricky math on paper.
4. Remove funds from FR connected banks into community banks.
While fractional reserve banking is a powerful system that generates a lot of wealth, it is also their potential downfall. If the people wanted to get
the attention of these institutions, all we have to do is remove our money from these banks, and deposit them in Local Community Banks.
Not only do community banks typically offer better interest rates, but their profits are more local. On top of that, FR connected banks would be
unable to loan 10X the amount of money we take out.
5. Move to a central banking system that does not charge a usury fee or interest.
This is the critical part of the deception. There is NO need to use a central bank that charges interest. Congress, the government, and the people
all technically have the right to coin money.
During the civil war, Lincoln printed interest free money called greenback, for the benefit of our citizens. On June 4, 1963 JFK signed Executive
Order No. 11110 that returned to the U.S. government the power to issue currency, without going through the Federal Reserve. There are also many other
“alternative currencies” in circulation in the US that are legal.
Alternative Currencies - wiki
Ithaca Hours - Alternative Currency - Ithaca, New York - Important link
Does anyone have anything they can argue in support of the Fed? I'm interested in hearing your thoughts regardless.
