What the FED!?!?

The Federal Reserve. What, exactly, is the Federal Reserve? I asked myself this question a few years back after watching Greenspan lower interest rates to nearly zero (deja vu!). A move that helped spark the largest housing boom in our countries history. What I found shocked me to my core. I felt devastated that someone who has a finance degree, has followed the markets since the age of 17, and worked for a mutual fund could be so unaware that the Federal Reserve is not what it says it is. It is not Federal. There are very little (if any) reserves, and it is a bank in only the loosest of terms. My research into the history of central banking sent me on a journey that exposed the true rulers of the world: International Bankers. It showed me that the markets are not truly free. That a small group of ultra-wealthy, uber-powerful families control all banking. All markets. All resources. The finding was so traumatic I quit my research mid-stream. It made me have a thought progression something like this, "Could it be that all I was taught about the free-market system is just a scam? Could it be that I paid several large state universities a total of $40K to be lied too? Could they have indoctrinated me with a bunch of crap so that I would go out and defend and strengthen the status quo? Could it be that those who benefit the most from my desires to be a multi-millionaire were also the ones who subsidized my student loans? Oh shit..." That day I closed down my computer, went to the LQ, and bought a big bottle of vodka. The illusion had been shattered, and I was faced with the same red pill/blue pill decision that Neo faced in the Matrix. I could easily have said, "Fuck It" and went about my life pursuing money, money, and more money. Thankfully, I did not. I got drunk, wallowed in my sorrows for a while, but eventually sobered up and realized what I must do. I must understand the TRUE nature of the banking system and relay my findings to as many people as I could reach. The implications of what I found were nothing short of revolutionary. The words I use could be regarded as heresy, treason, or worse. Both are serious. One deadly. However, the power of those who control the financial markets is nothing compared to the power of an educated public. The Powers-That-Be make decisions based on hate and fear. If we make decisions based on love and compassion, we will be infinitely more powerful than any banker in history. Move over decedents of Mayer Rothschild, the world is about to turn your families centuries-old cartel on it's ear. The time for a global financial awakening has arrived...are you ready?

A Brief History of the Federal Reserve System

The Federal Reserve System (the Fed) came in existence on December 23, 1913 with the passing of the Federal Reserve Act (it was later signed into law by President Woodrow Wilson). The act gave power to the newly created central bank to oversee all commercial banks and set monetary policy. The planning for the Federal Reserve Act took place in secrecy. In 1910, a group of bankers and politicians took a private rail car from New Jersey to Brunswick, Georgia, ultimately staging their meeting at a private resort on Jekyll Island. Interests from the Rockefeller's (Senator Nelson Aldrich - Senate Banking Committee and Frank Vanderlip of National City Bank of NY), the Morgan's (Henry Davidson and Charles Norton - both presidents of Morgan owned banks in NY), and the Warburgs (Paul Warburg-family member of the European Warburg families who control banking interests in Germany and Holland) all met to discuss the formation of the federal reserve system. (A.P. Andrew - Assistant Treasury Secretary was also in attendance). Why would a group of the worlds most powerful banking families, as well as members of the senate and treasury, make a secret trip to a private island in the middle of no-where to discuss the establishment of a central bank? Maybe it is because they knew what they were doing was in their best interests, and not in the best interests of the citizens of the United States. Maybe it is because they knew it would give them a vehicle to control the power structure of the country, simply by controlling it's money supply. How was this not collusion? How was this not treason?

Legal status of the Federal Reserve System

THE FED IS NOT A BRANCH OR DIVISION OF THE FEDERAL GOVERNMENT! It is a private institution (although they call themselves quasi-public). In Lewis v. United States the US Court of Appeals finds that "The Reserve Banks are not federal instrumentalities...but are independent, privately owned and locally controlled corporations." While this case deals with the Reserve Bank of San Francisco, it is indicative of the system structure. The Fed has also never been audited, does not answer to Congress except through direct testimony, regional bank heads are nominated by member banks (i.e. the heads of Wells Fargo, US Bank, Citi, etc.), FOMC meetings are held in secret, with minutes surfacing weeks after...WTF? If no one else can print US Dollars but the Fed, yet it is a collection of privately held corporations, then what would you call this organization? A monopoly or a cartel? Now we know why it is illegal to counterfeit money...the Fed doesn't like competition!

How the Fed affects the money/credit supply, interest rates, etc?

The Fed's largest task is the supervision of the buying and selling of Government securities in the open market. This becomes interesting as we will see in a minute. If the Fed needs to loosen monetary policy (i.e. increase liquidity; increase the money supply; print money) the Fed buys Government securities from a short list of hand-picked firms (see current list of primary firms). If the Fed needs to tighten monetary policy (i.e. contract money supply) they can sell these same securities at their own discretion. If the Fed is responsible for the supervision of the buying/selling of these securities, but also may sell them at their own discretion, is there not a possibility for a conflict of interest arising somewhere?

Another way the Fed can control the money supply is through interest rates. The Fed sets a rate called the Discount Rate. This is the interest rate that the Fed charges banks who borrow from them, who then in turn make loans to people like you and me. By increasing the discount rate, it increases other rates such as the Prime Rate. When interest rates increase it sparks savings and slows down lending. The opposite is true when you lower rates. People will save less and borrow more. We have had very low interest rates for over 6 years now, and that is a big part of the problem we see in the markets today. Everyone borrowed and no one saved for waaaaaay too long...now we're F@$%ed!

Inflation. What is it? How is it controlled by the Fed? Is there anything backing the dollar to help with inflation?

Inflation is NOT the increase in prices of goods, it is actually the devaluing of our currency. We constantly get inflation because we are constantly increasing our money supply. Look at it like this. Say I have 10 apples and you have 10 oranges. We want to trade, and since we both have the same quantity of fruit, we decided that it will be 1 apple for 1 orange. Now, lets say the next time we meet I have 20 apples and you again have 10 oranges. We decide to trade again, but this time it is 2 apples for 1 orange. What happened? Did the value of the oranges go up, or did the value of my apples go down? We could argue both sides, but the right answer is that the value of the apples went down. Why? Well, you still had the same number of oranges, so there is no "scarcity" in oranges. What changed was my number of apples. Since I had a lot more than the last time we traded, the value of them has diminished. The same is true with our dollars. Since we have continually created more and more dollars we will continually pay more and more dollars for the same goods. WTF you say? Wait, it gets better!

At the end of WWII, the leaders of the effected countries got together in Bretton Woods, New Hampshire to hammer out a new international economic frame work. What they decided was; 1) The US Dollar would be the global reserve currency; 2) That specific foreign governments and central banks could redeem dollars for gold at $35 an ounce, and; 3) That other countries currencies valuation would be tied to the dollar and that those currencies could be easily converted into dollars at anytime. This was a monumental agreement that helped foster the rebuilding of Europe and Japan physically, socially, and of course economically. Flash forward to the 1960's. The US is fighting an unpopular and expensive war in Vietnam, the costs of social programs are sky-rocketing, and the economy is sputtering. Raising taxes wasn't an option, so what was LBJ to do to pay for it all? His answer - print money! This caused a lot of inflation here in the US, and made foreign governments and banks very uneasy about getting their gold back. So the foreign leaders started redeeming their dollars for gold. By the end of LBJ's reign the outstanding dollars that could claim gold was $36 billion, but only $18 billion in gold was available. In comes Richard Milhous Nixon. Instead of stopping the printing presses he suspends the convertibility of dollars to gold "temporarily". That temporary measure was never lifted. Nixon basically abolished all remnants of the gold standard. Good-bye sound money supply, hello perpetual inflation! Just think about the difference in home prices between November 1971 ($25,700) and November 2008 ($220,400). That's an increase of 758%!!! Even though median wages have increased 456% for the same period, you can see that the common man is losing his shirt in this fight.

This is B.S.! Let's make some changes!

Well, not so fast. In 1993 Texas Representative Henry Gonzalez (Head of the House Banking Committee) proposed several changes to the Federal Reserve System. 1) Conduct an independent audit of the operations of the Fed. 2) Video tape all FOMC meetings and release those tapes after every meeting. 3) Make it so the President appointed the heads of the regional banks, and not the member banks within the region. Then President Clinton and Fed Chairman Greenspan both fought these changes, and thus none of the suggestions were implemented. Clinton went as far as to say it would undermine the confidence in the Fed. Why? Is it because the Fed is a giant Ponzi scheme, and we are the ones at the bottom of the pyramid getting hosed? No, that couldn't have anything to do with it...

Unfortunately there is only one way we can get ourselves out of this. We must abolish the Fed, and not allow another central bank to take it's place. Only with a currency that is 100% backed by gold can we get back to firm ground with our money supply. Having it under the control of international banking interests is a great way to ensure that we all stay work-a-day slaves to the system. I don't know about you, but I see no purpose in working my butt off all my life in order to make something that is worth less and less every year. Why is it that someone who builds houses and makes $35,000 a year is getting paid less and less every year due to the "hidden tax" of inflation? Is it because he builds things of real value, while being compensated in worthless paper? Or even better, worthless digits in a banks computer data base? You probably already know the answer.

I believe we are at a cross-roads. We can keep the status quo and end up paying $100 for a cheeseburger, or we can develop a more sane system for the exchange of goods and services. It was Albert Einstein that said, "The definition of insanity is doing the same thing over and over again and expecting different results". I am tired of acting insanely, how about you?

Here is a link to a great video from the Mises Institute that talks about the Federal Reserve System. I used the video in my research so you may see some similarities in the information.