The
Fed regulates banks, influences interest
rates, and determines the size of our
money supply through a complex process,
called Open Market Operations, that
involves buying and selling securities
(mostly government debt). The Fed's
policies determine the value of your
money, the health of the economy, and
the rates you pay to borrow. And yet the
Fed is completely unrepresentative and
unaccountable.
Aside
from the Chair, Fed board members
serve the longest terms of any
federal bureaucrat (14 years), and
they can't be fired for political
reasons.
The
Comptroller General, head of the
Government Accountability Office, is
legally prohibited from auditing the
Fed's Open Market operations, and
several other important Fed
activities. (See
our Background page.)
The
Fed is part of the Federal
Government, but acts without any of
the regular checks and balances.
Some
argue that this secrecy and independence
are necessary to protect the Fed from
partisan political influence. Their
argument is reasonable, but it leaves
the American people in the grip of a
virtual economic dictatorship. And
the economic consequences of Fed
policies can be just as devastating as
taxes, regulations, and even war . . .
Many
economists, including Fed Chair Ben
Bernanke, blame the Fed, in one way
or another, for the Great
Depression
Many
also blame the Fed for the recent
housing boom and bust
The Federal Reserve System should be abolished. It is
immoral
unconstitutional
harmful to our economy
The Federal Reserve was created by the Federal Reserve Act,
which was written by a conspiracy of powerful bankers to give them
the power to cheat, steal, and corrupt America. Outrageous claims?
What's outrageous is how completely true these claims are, and how
ignorant Americans are of the truth.
The Federal Reserve is the cause of inflation.
The Fed was created to inflate. Inflating is the purpose of the
Fed. Outrageous claim?
The Federal Reserve caused the
"economic crisis" of late 2008, and the
medicine they prescribed was more toxic inflation of
the money supply, called the "bailout" by its
detractors, and a "rescue plan" by the Bush
Administration. The Obama Administration is committed
to the same policies.
If you were to read transcripts of meetings of the Board of
Governors of the Federal Reserve System, and hear them planning
out the details of our economy and its future growth, and
understand how they engage in the debasement of
the currency -- which has always been understood to be wicked
and immoral -- and if you were told that the transcripts you are
reading were translated from the original Russian, you
would assume you are reading the words of atheistic communist
czars in the Soviet Union. The Federal Reserve has nothing to do
with capitalism in "the land of
the free."
The links below are often to official Federal Reserve websites.
Their own words condemn them.
Most Americans do not know what "The Federal Reserve
System" is, or how it functions. Yet it is arguably the most
important government agency of them all. By far.
It is also immoral and harmful. This webpage will show:
In an introduction to his notes on the Constitutional
Convention's deliberations in Philadelphia, James Madison, the
"Father of the Constitution," noted that one of the
defects the Convention was assembled to remedy was that
In the internal administration of the States, a violation
of contracts had become familiar, in the form of depreciated
paper made a legal
tender.
If you're like 40% of all government-school graduates who are
functionally illiterate when they finish schooling, you probably
don't understand that statement, or appreciate its full
significance. If you don't understand the importance of Madison's
statement, click here.
What Madison is saying is that the economy
can't prosper if people can't depend on their contracts. Imagine
that you're a home-builder, and you enter into a contract with a
homebuyer to build a home for $100,000. Now imagine that the buyer
has "connections" with a judge or some other "public
servant," and he gets that politician to pass a law that
changes the amount due in the contract from $100,000 to $10,000. You
just built a $100,000 home and you only get paid $10,000. Your
attorney now tells you that no court will enforce any contract you
write. Will you be more likely or less likely to enter into a
similar contract in the future?
Only 1 out of 100 Americans understand what Madison means about
"depreciated paper."
Until recently, paper currency was backed by gold or silver. A
"Silver
Certificate" used to say, "This certifies that there
is on deposit in the Treasury of The United States of America One
Dollar in silver payable to the bearer on demand." Today all
you can redeem your paper money for is more paper money.
"But I can buy things!" some will say.
Nobel prize-winning economist Milton Friedman has described the
mythical, circular reasoning surrounding paper money:
. . . each accepts them [the pieces of paper] because he is
confident others will. The pieces of green paper have value
because everybody thinks they have value, and everybody thinks
they have value because in his experience they have had value.
In the final analysis, emphasizes Friedman, acceptance of paper
money "is a social convention which owes its very existence to
the mutual acceptance of what from one point of view is a
fiction."
Your children may learn this lesson the hard way.
* Of course,
printing pieces of paper is not necessary -- "money"
is just blips in a bank's computer.
The Social Security system is bankrupt. There may
come a day when the government will simply have to print up enough
paper money to pay social security recipients.* If enough
paper money is created to pay all social security obligations, the
value of everyone else's paper money will decline. The government
says everyone will get their benefits, but admits the
benefits may not be worth anything when they get them. This is
the evil of paper money.
Accordingly, Madison and
the other delegates included a provision in the U.S. Constitution
that prohibits paper money, or the emitting of "bills
of credit." (Art. 1, § 10, ¶ 1) That provision reads:
No State shall enter into any treaty, alliance, or
confederation; grant letters of marque and reprisal; coin
money; emit bills of credit; make any thing but gold and silver a
legal tender in payment of debts; pass any bill of
attainder, ex-post-facto law, or law impairing the obligation of
contracts; or grant any title of nobility.
In Federalist Paper No. 44, possibly the most
authoritative source for constitutional interpretation, Madison
explained the provision:
The extension of the prohibition to bills of credit must give
pleasure to every citizen, in proportion to his love of justice
and his knowledge of the true springs of public prosperity. The
loss which America has sustained since the peace, from the
pestilent effects of paper money on the necessary confidence
between man and man, on the necessary confidence in the public
councils, on the industry and morals of the people, and on the
character of republican government, constitutes an enormous debt
against the States chargeable with this unadvised measure, which
must long remain unsatisfied; or rather an accumulation of guilt,
which can be expiated no otherwise than by a voluntary sacrifice
on the altar of justice, of the power which has been the
instrument of it. ... No one of these mischiefs is less incident
to a power in the States to emit paper money, than to coin gold or
silver. The power to make any thing but gold and silver a tender
in payment of debts, is withdrawn from the States, on the same
principle with that of issuing a paper currency.
After the Constitution was ratified, THE
COINAGE ACT OF 1792
was passed, specifically defining the "dollar" as a
certain amount of gold or silver.
The most comprehensive and definitive study on the legal
history of the United States coinage, paper currency, legal
tender, and political banking from the Colonial period to the
present day. The author, Edwin Vieira, Jr., holds four
degrees from Harvard: A.B. (Harvard College), A.M. and Ph.D.
(Harvard Graduate School of Arts and Sciences), and J.D.
(Harvard Law School).
What is Money?
What is Moral Money? What is Immoral
Money?
Money is "a medium of exchange." A "medium" is like a channel or a bridge. It bridges two people who want to trade.
Money is the most marketable commodity in the economy.
Without money, you must barter for the things you want. You have chickens; you want hamburger. You have to find someone who has cows that wants chickens more than his cows. If the guy with cows wants fish, you're out of luck. But if there's something that everyone in the economy is willing to trade for -- like gold and silver -- then these commodities can be used as money and you can trade silver for his cows, and he can trade silver for the fish he wants.
The government destroys honest money.
Pull a quarter out of your pocket. Note the orange ring around
the edge. This is copper. Prior to 1965 coins like dimes and
quarters were made out of silver. Today they are
nickel-coated copper, not silver. Even pennies
have been "debased." According to the
U.S. Mint,
The [pre-]1982 copper cent weighs 3.11 grams and is 95%
copper and 5% zinc. The current copper-zinc cent weighs 2.5
grams and is 97.5% zinc
and 2.5% copper.
Who do you think profits from the substitution of less-expensive copper
for silver and cheaper zinc for copper? Answer: not
you.
And if you think there are profits to be made by debasing coins,
think about how much can be made with paper money and the government
printing presses! Then consider that most of our money is nothing
more than electronic blips in the bank's computers.
By debasing the currency, our government has engaged in systematic
theft on a massive scale.
And whenever the government and its friends create new money, it
makes each dollar you have worth less.
The government steals purchasing power from you and redistributes
it to its supporters. The government buys votes with your future.
So, if someone tells you that "gold has intrinsic
value," this is not an economist speaking. An economist
would say that gold has historic value. He might even say
that gold can safely be expected to have future value well
above a price of zero. But he will not say that gold has intrinsic
value. That concept has no meaning in modern economics.
The Federal Reserve is refusing to identify the recipients
of almost $2 trillion of emergency loans from American
taxpayers or the troubled assets the central bank is
accepting as collateral.
Fed Chairman Ben S. Bernanke and Treasury Secretary Henry
Paulson said in September they would comply with
congressional demands for transparency in a $700 billion
bailout of the banking system. Two months later, as the Fed
lends far more than that in separate rescue programs that
didn't require approval by Congress, Americans have no idea
where their money is going or what securities the banks are
pledging in return.
By creating new money out of thin air, the Federal Reserve
"spreads the wealth" by redistributing purchasing power.
The Federal Reserve (and the federal government in general) does not
create new goods (food, housing, clothing, etc.), it simply prints
up tickets to buy the things that have been created by those who
work for a living. The
people who receive these tickets to wealth are losers. They don't
have the money they want, and they are willing to become slaves
to the lender in order to get what they (1) haven't worked for,
or (2) haven't worked successfully, or (3) haven't successfully
satisfied the needs of consumers. These are lower class people. The
Fed gives them the power to get what they want NOW, to get
"something for nothing," and this purchasing power is
taken from people who worked successfully, deferred gratification
and saved for a rainy day, or are living on a fixed income (pension,
annuity, etc.).
In other words, the Federal Reserve transfers purchasing power
From the best to the worst; From the productive to the
unproductive; From the future-oriented to the
present-oriented; From the successful to the unsuccessful; From
the hard-working to the lazy.
In response, the Fed will say they are creating "economic
growth" by making business loans to new or existing
businesses.
If these borrowers are entrepreneurs, then the businesses they
start will have the moral character of their founders. These
business owners have not saved the profits from past successes.
They don't want to work and save, they want money NOW so they
can start a business and make money NOW. These businesses will
Sell the worst products, not the best; Appeal to
short-sighted people, not the long-term interest of the country; Use
up scarce resources and then go belly-up; Manufacture
products that lazy people buy, not hard-working people.
Yes, the profits from the "Pet
Rock" company added to the nation's GDP and added to
our "economic growth." Is this kind of "economic
growth" truly good for mankind?
The Federal Reserve claims to know how to make our entire economy
grow and create full employment. It claims to know which businesses
need capital. It claims to know how to engineer economic growth, and
how to orchestrate industrial development. By controlling the money
system, the Federal Reserve controls the entire economy.
This is socialism, and a complete denial of the theory of
"the division of labor" in a capitalistic economy. There
is not a single human being on earth who knows how to build a pencil
from scratch. How can the Federal Reserve build an entire pencil
business, oversee the pencil industry, and engineer the entire
economy, of which the pencil industry is just a part? Read about
"the Invisible Hand" that created the humble pencil: Capitalism
and the Division of Labor: Astonishing Providence and the Pencil.
In comparison to "the Invisible Hand," the Federal Reserve
is a very, very bad idea.
A good idea for the bankers, but not for the rest of us.
From January of 2001 to August of 2008, the Federal Reserve
increased the supply of checkbook-money capital by more than 70
percent of the cumulative total amount it had created in the whole
of the previous 88 years of its existence — that is, almost
2 trillion dollars. This means people who borrowed money from
the Fed from 2001 to 2008 were able to purchase $2 trillion worth of
goods and services instead of those who worked and saved.
These hard-working, productive people had their dollars devalued,
and were able to buy $2 trillion less than they would have in the
absence of the Fed.
Your Congressman must take an oath to support the Constitution,
yet 99% of all politicians do not support what the Constitution says
about money and banking. (If they went to government-run
schools, it's likely that they don't even know or understand
what the Constitution says.) The principle of "Liberty
Under God" is as relevant today as it was 200 years ago,
and the old-fashioned morality embodied in the Constitution's
principles on money and banking can be applied in tomorrow's world
of financial cryptology and digital cash.
Any politician who takes a solemn oath to
"support the Constitution" should be committed to the
following goals:
uphold its constitutional duty to maintain the purchasing
power of the dollar by enacting legislation that makes long-run
price stability the primary objective of Federal
Reserve monetary policy;
recognize that the Fed cannot fine-tune the real economy
but can achieve monetary stability by following a rule that
confines nominal growth of gross domestic product to a
noninflationary path;
recognize that all prices
should naturally be going down, and hold the Fed
accountable for achieving zero expected inflation over a
reasonable time frame;
abolish the Exchange Stabilization Fund, since the Fed’s
role is to achieve zero inflation, not to stabilize the
foreign exchange value of the dollar by intervening in the
foreign exchange market; and
offer no resistance to the emergence of digital currency
and other substitutes for Federal Reserve notes, so that
free-market forces can help shape the future of monetary
institutions.
Primary
Dealer Lists - the banks from which the Fed buys securities,
according to the Federal Reserve Bank of New York. The money
created by the Fed and given to these securities dealers forms
the basis for money creation throughout the banking system.
I appreciate your comments Do
you disagree with me? I will thoughtfully, prayerfully,
respectfully and personally respond to your criticisms email:
comments@KevinCraig.US
The
Fed regulates banks, influences interest
rates, and determines the size of our
money supply through a complex process,
called Open Market Operations, that
involves buying and selling securities
(mostly government debt). The Fed's
policies determine the value of your
money, the health of the economy, and
the rates you pay to borrow. And yet the
Fed is completely unrepresentative and
unaccountable.
