Before the financial crises of 2007, most Americanshardly ever heard about the Federal Reserve or what is commonly called the Fed. In fact, even atthe present moment, many Americans know very little about the Federal Reserve, exceptfor the fact that it serves as the nation’s central bank and it takes care of the economic wellbeing of the United States. For this reason, it is definitely good to dig deeper into what the Fed is all about to understand how it functions.
A Brief History of the Federal Reserve
Before the creation of the Federal Reserve, every state, bank and financial organization in the US could create its own money. This creation of money, however, was backedby government bonds, gold and silver. At one point in the past, there were at least 30,000 different currencies found circulating around the United States. However, the financial panic of 1907 paved the way for the eventual drafting of the Federal Reserve Act. TheFederal Reserve document was prepared in 1910 at an island off the coast of Georgia by a group of people with the following aims:
- To stop the growing competition among themselves(the attendees) and among newer banks.
- To obtain a franchise to create money for the purpose of lending.
- To have control of the reserves from all the banks so that the banks will never be exposed to financial drains.
- To shift the losses to the taxpayers.
- To convince the U.S. Congress of its purpose—to protect public interest.
The draft for a banking cartel had been craftily written that in December, 1913, the Federal Reserve Act was signed into law by then President Woodrow Wilson, creating the Federal Reserve System. This law transfers the control of the monetary system of the US from the hands of the government into the hands of some of the wealthiest men in America.
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What is behind its Name?
Despite its name, the Fed is definitely an institution external tothe government of the US. However, its name creates the impression that the Fed is an integral part of the Federal government. Although the Fed is run by a presidential appointee who is usually selected from a list of names that are forwarded by the Fed to the US president, the Fed still remains beyond the control of the US government. The fact however remains that the twelve regional Federal Reserve banks are privately owned and run by private citizens.
The Fed does not have any reserve, and it seems that it is only creating money out of thin air. This fact was highlighted by G. Edward Griffin in his book,“The Creature from Jekyll Island,” wherein he cleverly pointed out that“the Fed creates money via the “Mandrake Mechanism.” The Mandrake Mechanism was coined by Griffins from the 1940’s comic character—Mandrake the magician—who virtually creates anything out of nothing.
The Biggest Robbery Ever…
Every time the U.S. government needs money, it releases treasury bonds to the Fed. The Fed then buys the bonds with money that iscreated out of thin air for the U.S. government, and this money comes with interests. These interests are then paid for and shouldered by the American taxpayers. Henceforth, some economists call it “the biggest robbery ever enacted on the American people.”
The Fed has the unlimited power and monopoly in the issuance of money, inthe manipulation of interest rates, andeven in the running of bailouts in secrecywithout the consent of the U.S. President or the U.S. Congress. The Fed has never been transparent since its creation over a century ago, and it has not submitted itself to the top authorities of the nation in its dealings and actions. Moreover, any leader or person of authority who criticizes or demands anything from the Fed is either bribed or threatened to submit to the prevailing Fed policies. This is how the people behind the Fed achieve their subtle control of one of the greatest nations on earth.
The sad fact, however, is that the Fed System has been copied by other countries who look up to the United States. Whatever is happening in the US is then multiplied and is happening around the world, in those countries where there arecentral banks that control the minting and printing of money.