Truth in Media: 100 Years of the Federal Reserve

Contributed to TLB by: Ben Swann.

New:  “The United States Federal Reserve announced Wednesday that it  will start drawing down (i.e. “tapering”) its multibillion-dollar quantitative  easing policies in 2014. The Fed will begin tapering its $85 billion monthly  purchases of Treasuries and Treasury mortgage-backed securities by $5 billion  each starting in January.”

100 years ago, this December, the United States Congress created a central  bank today, we know it as the Federal Reserve Bank of the United States.   What most people don’t know is that the bank isn’t a federal entity and  candidly, it really has nothing in reserves.

Is the Federal Reserve good for the United States?  Is it even possible  to get rid of it?

The first step toward truth is to be informed.

10 years ago, virtually no American knew anything about the Federal Reserve  Bank.  Most thought it was a government agency, an entity that helps to  create and protect U.S. currency and our economy.  Then came along the  national rise of a Congressman from Texas by the name of Ron Paul.

One of the most impressive things about the career of now retired Congressman  Ron Paul was the national attention he drew to the Federal Reserve Bank.

It was Congressman Paul who made millions of Americans aware of a simple  truth.  That the single entity with the most power and control over the  U.S. dollar is not accountable to the American people.

So what exactly is the Federal Reserve?

To begin with, it is a private bank that serves as the exclusive bank of the  U.S. government.  Though it was created by Congress, the Federal Reserve  does not answer to Congress.  The President himself doesn’t have direct  oversight.

So what else does the fed do?

The Fed regulates financial institutions, manages the nation’s money and has  incredible influence over the economy.   The fed can raise and lower  interest rates, in fact, they are the only entity able to do so.

That is very big deal because with that power, the fed is able to control the  U.S. economy.  can cause the life savings of Americans to lose value  through inflation, controls the value of your investments, and even impacts  employment rates and manufacturing outputs.

An awful lot of power for an entity that has no accountability to the U.S.  people.  so where did this central bank come from?

A writer by the name of G. Edward Griffin blew the modern lid off this story  when he wrote a book called “The Creature from Jekyll island.”

He spoke to me via Skype.

Ben: For folks who don’t know the name, why is the book called “The Creature  from Jekyll Island”?

Griffin: Sure, because there is a lot of significance to it. Many people  think it’s just a tricky title to attract attention which frankly that’s some of  the motive for doing that but Jekyll Island is a real island, Ben, as you well  know, and it’s significant because it was on that island back in 1910 that the  Federal Reserve was created. And that’s an interesting fact of history that why  should something as important as the Federal Reserve system be created any place  other than Washington D.C.

Ben: How did the meeting at Jekyll Island in 1910 become a central bank in  1913?

Griffin: Back in 1910 when all of this happened, there was a great deal of  concern in Congress and among the American people about this concentration of  financial power in  the hands of a small group of companies, financial  centers, on Wall Street. The big banks, the big insurance companies, the  brokerage houses and so forth. There was a clamor at that time for legislative  reform, there’s that word that we hear so much about. What happened is that the  banks decided that the public was going to get its reform one way or the other,  so why should they just sit back and let it happen? They decided to take the  lead in that parade and make sure that they provide the so-called reform. They  were going to draft this legislation and of course, if it were known that they  were the ones drafting the reform legislation, it wouldn’t sell too well. So  there had to be a lot of secrecy about that particular period of history. Well  what were they concealing? It wasn’t just, they weren’t concealing just the fact  that they were the ones writing the legislation to control themselves but when  you follow that thread you come to the realization was what they were doing is  creating a cartel. You see these were competing banking companies within the  industry and this was at the time of history when competition was being replaced  by monopolies and cartels and this happened in spades as far as the banking  industry is concerned. And on Jekyll Island they created a banking cartel to  regulate itself, to set up its own rules, to offer it to the American people as  though as it was some kind of banking reform and the stupid politicians in  Washington accepted it and they passed this banking cartel agreement into law  and they called it the Federal Reserve Act.

It was in 1913 that congress, in passing the “Federal Reserve Act”  violated the U.S. Constitution and essentially granted its power to create money  to the Fed banks. Since 1913, the fed has ordered the printing of currency and  then loaned it back to the government charging interest. The government levies  income taxes to, among other things, pay the interest on the debt.

So when you take a dollar out of your pocket, look at what it says at the  top.  This is a Federal Reserve Note, currency issued by the Federal  Reserve Bank. In 1964, that changed.  President John F Kennedy issued an  Executive Order, 11110.  It gave the Treasury Department the explicit  authority: “to issue silver certificates against any silver bullion, silver, or  standard silver dollars in the Treasury.” This means that for every ounce of  silver in the U.S. Treasury’s vault, the government could introduce new money  into circulation based on the silver bullion physically held there.

These were United States Notes.  As a result, of that executive order,  more than $4 billion in United States Notes were brought into circulation in $2  and $5 denominations. $10 and $20 United States Notes were never circulated but  were being printed by the Treasury Department when Kennedy was assassinated.

After his assassination, The United States Note Project ceased.

Ben: To your knowledge, Mr. Griffin, is that Executive Order that was issued  by President Kennedy still active today?

Griffin: The Executive Order is not still in existence. It went through  several transitions. First it was absorbed into another Executive Order, it was  consolidated into another order, and then finally it was repealed, I think  Johnson himself got rid of it. But that’s really not the important question  whether it’s still standing or not because it never did represent what many  people thought it meant in my view. I checked into the allegation that President  Kennedy had taken a stand against the bank and that he was going to put an end  to the fiat money and go back to government issued notes. That’s the general  idea and that therefore that’s the reason he was killed. Unfortunately or  fortunately, whichever the case may be, the record really doesn’t support that  at all. And every time I went to try and run down the origins of this myth as I  call it, it just fizzled out unless somebody can give me some hard information  that I haven’t yet seen. I think it’s just one of those urban myths that is  popular.

So what has the Federal Reserve Bank been up to in the past few years?   As you probably know, the Fed has been holding interest rates at historically  low rates.  Meanwhile, the Fed has been creating between $40 and $80  billion dollars a month in U.S. currency.  The name you have heard this by,  quantitative easing.

The first round of Quantitative Easing came in late 2008 under President  George W. Bush.  The Fed initiated purchases of $500 billion in mortgage  backed securities in order to help resolve the housing crisis.  The Fed  also cut the key interest rate to nearly 0%.  QE1

The economy didn’t improve, but banks sure got a lot of money.

So, under Bernanke, the fed was at it again.  The second round of  Quantitative Easing was from November of 2010 until June of 2011.  The  Federal Reserve went to work buying up $600 billion in U.S. Treasury Bonds to  spur the economy.  But again, it didn’t work.

Part of the reason QE2 failed was because it wasn’t meant to spur the U.S.  economy.  That $600 billion was given to foreign banks.  During the  QE2 funding period cash reserves of foreign banks grew from $308 billion to $940  billion

In the fall of 2012, came the beginning of QE3, in this case, the Fed began  purchasing mortgage backed securities and treasuries at a rate of $85 billion  dollars a month.  What made this Quantitative Easing attempt different than  others, there is no end to it.

In January of 2013 the Fed began what is called. QE4, an attempt to continue  to purchase securities and hold interest rates down until the unemployment rate  drops to below 6.5%.

In February of 2014, Janet Yellen will succeed Ben Bernanke as Fed chairman  and has already said that her priority is to continue these programs even longer  than was originally anticipated. Yellen says that unemployment is a bigger  problem than inflation so the for the Fed it will be business as usual.

What you need to know:  Is that in 1913, the original charter for the  Federal Reserve Bank allowed it to exist for only 20 years.  In 1927, the  Fed charter was renewed.

Some believe that on December 23rd, 2013, the Fed charter runs out.   That at the 100 year anniversary, the Fed will have to be renewed by  Congress.  Others say that the Fed does not have to be renewed, that it is  a permanent entity.  That happened they say in 1927 under the McFadden  Act.

Whether that is true or not, here is something undeniable, in the 100 years  that the federal reserve bank has been in existence, the U.S. dollar has lost  98% of its value.

The purpose of creating the Federal Reserve was to protect the dollar.   The Fed hasn’t done that.

The Federal Reserve Bank didn’t stop the Great Depression, the Federal  Reserve Bank has done nothing to improve the so called great recession. In fact,  some can make the argument that the fed policies under Alan Greenspan in the  early 2000‘s and not only helped to create our current situation, but the Fed  policies under Ben Bernanke have made the economy worse.

The bottom-line, the one entity that truly has the power to end the Fed is  Congress, but if Congress were to do that then Congress would also have to be  responsible for fulfilling its constitutionally mandated role to “to coin money” and “regulate the value thereof”.


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