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?
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.
