January 22nd, 2009
If you are like the vast majority of Americans, you probably assume that the Federal Reserve is some sort of agency of the U.S. Government. It isn't. It is actually a privately owned for-profit bank. So, who owns the Federal Reserve? It is owned by the private stockholders, and no one knows who the stockholders are! Yet the decisions made by the Fed in regard to interest rates and money supply affect the lives of every American as much or more than do the decisions of our elected and appointed officials. The Fed expands or contracts the money supply through its power to issue currency, creating boom and busts (aka "business cycles"), even though Article 1, Section 8 of the Constitution states that "Congress shall have the power to coin money and regulate the value thereof."
The Federal Reserve Act was by passed by Congress on December 23, 1913 when most members of Congress were gone for the holidays; then when the Senate had not properly adjourned, leaving their session technically still open, three members of the Senate (according to the Senate journal) present on that day passed the act. It was then signed into law by President Woodrow Wilson.
The unconstitutional Federal Reserve is a private bank, owned by their private stockholders, with the purpose of maximizing their private profits. Many people are led to believe that the Fed is a government institution subject to government oversight; but it is not. On September 21, 2007, Jim Lehrer interviewed former Federal Reserve Chairman Alan Greenspan on PBS's News Hour. Lehrer asked Greenspan what should be the proper relationship between a chairman of the Fed and The President of the United States. Greenspan replied, "Well, first of all, the Federal Reserve is an independent agency, and that means, basically, that there is no other agency of government which can overrule actions that we take. So long as that is in place and there is no evidence that the administration or the Congress or anybody else is requesting that we do things other than what we think is the appropriate thing, then what the relationships are don't, frankly, matter."
Some argue that the Fed is a quasi-governmental agency, but the President appoints only two of the seven members of the Federal Reserve board of Governors, who serve a 14-year term. As we have recently seen through Bloomberg News' lawsuit this past October, the Fed is not a government agency and is thus not obligated to share information under the Freedom of Information Act, and they have never been audited. In reality, the Federal Reserve is about as federal as Federal Express.
When the United States Government spends more than they take in through revenue, it has to borrow money through the issuance of Treasury Bonds, Bills, or Notes, to cover the deficit. The Federal Reserve loans the government money at interest by buying a large portion of the bonds, by simply creating the money out of nothing. The American taxpayer has to pay back this loan, both principle and interest, mainly through our Federal Income Tax. But, the Fed only creates 10% of our country's money supply. The other 90% is created out of nothing through the use of the Fractional Reserve Principle by commercial banks.
Once the government deposits the money it borrowed from the Fed into a bank, that bank(s) is allowed to loan out at least ten times that amount to borrowers as long as it keeps 10% on deposit (according to Modern Money Mechanics, published by the Fed). So if, say, a million dollars is deposited, banks can create 9 million dollars out of nothing, and lend it to you. Since only 3% of the money supply is in physical bills and coins, all of this is done digitally -- using electronic credits.
While you and I -- the borrower -- have to pledge real assets, such as a home or a car, as collateral to get a loan, the bank lends you money it created out of nothing with interest tacked on. So while you are on the line for your home, they have a theoretical loss of not being paid back the money they created out of nothing; and if you default, they take your home or whatever else you pledged in order to secure the loan. Does that sound like a system you would describe as fair?
Why does our government borrow money that it has to then pay back with interest from a private bank when it has the power to create all the interest free money it needs, itself? Why would we pay the Fed (which is a small group of men) billions of dollars every year in interest from money they created out of nothing and lent to our government? Why does almost no one know these facts?
I have only scratched the surface on the implications of this subject. I assure you everything I have written is true, but please investigate further for yourself. Search for The Money Masters documentary and the Money as Debt video on the internet, or the book The Creature from Jekyll Island.
Originally published on Business Lexington.
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© 2009 William McCullough
ABOUT THE AUTHOR
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A Lexington native, William McCullough is a 2005 graduate from UK with a major in agricultural economics and a minor in business. He owns Solar Energy Development, LLC, and can be contacted at wbm82@hotmail.com. |
Disclaimer:
The opinions expressed above are not intended to be taken as investment advice. It is to be taken as opinion only and I encourage you to complete your own due diligence when making an investment decision.
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Posted in Monetary Commentary, Guest Commentary, Government Policy, William McCullough
Comments (6)
Posted by Chuck on January 26th, 2009:
I've been aware of how central banking works for many decades.
The owners of the Federal Reserve are the Rothchilds, Vanderbilts, etceteras; it is well known, though not officially. They basically control the world. Well, not quite, but are well on the way to.
A book about the history of central banking was written by an insider, Carrol Quigly. When Clinton was running for President, he listed Carrol Quigly as one of his favorite authors. I don't know what it says about him... or what he intended to communicate by mentioning Quigly to a reporter; probably just a nod to conspiracy trackers, or an appeal to people to learn more about what's really going on.
As for the question why, my guess is that the conspiracy of central bankers have enough revenue to penetrate and control government agencies and media around the world, and can make assassinations --or even a war-- happen any time. If they are ever going to be defeated, it will take not just one government but the governments of many nations around the world working in tandem to defeat them. I believe Quigly's saying that their intentions are neither good nor evil, rather pragmatic; but they seem to be completely ignorant of the environmental catastrophe they are plunging this planet into. I'm sure their intention is not to bring the end of the human race, but that's what they are going to achive the way things are going.
Anyways, as hair-raising as this whole thing is, one must admit the genius of the founders of that secret organization. The invention of central banking produced, for the first time in history, fairly stable currencies without a need to pegging to gold.
Non-central-banking economies, throughout history, end up with deflations or inflations in a short time. Even currencies that used gold and silver for the coinage would be un-stable, with people melting coins to recover the metal. So much for gold-standard advocates. Neither gold standard nor even gold used in coinage can ensure the value of a currency; things are much more complicated than that. The fact that a currency coined in gold can lose so much value as for people to melt the coins attests to the fact. The problem is that even when coins are made of gold, their face-value and gold value can still vary independently. Why? Because value is a feeling; a measure of "desirability", which is something subjective. Dollars, Marks, Yuans, etc. are not measures of value like inches and meters are measures of length, nor are gold or silver, for that matter; because length is an objective continuum, whereas "value" is a subjective continuum. The statememt "gold has constant value", which many gold bugs seems to repeat with religious fervor, cannot be rigorously proven NOR un-proven, because the statement has no real meaning. We'd need a reliable metric of "value" to verify that gold's value remains constant, and the only measure gold bugs would propose is gold itself, which makes the proposition circular.
Central banking solved the problem of value. How? Since all money is loaned into circulation, we, the beneficiaries --or victims-- of the system, forever need cash to service our debt load. This makes cash into a self-consuming commodity. The value of money is assured by our need of it... in order to pay it back. Genius! Nothing less than genius! And the desirability of money can be adjusted via interest rates.
The problem is, interest on the total debt is inherently un-payable, and the only way debt can be fully paid is by injecting yet more debt into the system, which is synonymous with increasing the money supply, since new money is always loaned into circulation.
But to continuously increase the money (debt) supply without inflation requires growth; and our planet cannot sustain constant growth forever... ergo the current "End of Times" situation... |
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Posted by William McC. on January 26th, 2009:
Jim G,
Thank you for your comments. I read George Ure's site Urbansurvival.com everyday, and I recognize you from his mentioning your comments on current events. Thanks for reading my article, which was originally published in Business Lexington (KY), and thanks for what you do.
William McC. |
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Posted by William McC. on January 26th, 2009:
Paul, the Fed doesn't issue the US government bonds/notes, it buys the bonds/notes from the US government. This, in effect, is how our government is issued money- all at interest.
The Fed is the "investor" in the sense you are looking for. They do purchase the US debt instruments, but they don't make a deposit because they are the ones that create the money out of nothing to buy the bonds you see. The government deposits the money in a commercial bank that they receive from the Fed for the purchase of the bonds. |
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Posted by Jim Goudling on January 26th, 2009:
I also thank you for stating the truth about Central Banking. It takes guts to stand-up to the people who truly run the country. Many have been ruined for simply speaking what you've written.
Allow me to recount your most important paragraph:
"Why does our government borrow money that it has to then pay back with interest from a private bank when it has the power to create all the interest free money it needs, itself? Why would we pay the Fed (which is a small group of men) billions of dollars every year in interest from money they created out of nothing and lent to our government? Why does almost no one know these facts?"
Thanks,
Jim g
www.jamesgoulding.com |
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Posted by Paul Mascia on January 25th, 2009:
One question I have on the Fed's ability to create money from nothing... Doesn't the Fed need a investor/lender for the bonds/notes/bills it issues to the U.S. government? Doesn't there need to be some investor (individual, foreign government, whoever) to actually make a deposit via purchasing the instrument and becoming an owner of the U.S. government's obligation to repay? Thank you. |
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Posted by DrKrbyLuv on January 25th, 2009:
Thank you for striking at the core of the problem - the central banking scheme. We will never fully prosper or be free as long as our nations most important powers - monetary control and the issuance of a currency - are held by an elite group of private bankers.
The exploitation of the central banking scheme is the core issue that the people need to understand. |
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