Thursday, September 17, 2009

You are a slave to the "Federal Reserve System"



Did you ever ask where does money come from? Most people believe the governments around the world create and control money. This is only partially true. Most governments do influence the creation and circulation of money, but most countries have a "Central Bank" that operates separately from the government. The history of money spans thousands of years, and it is worth studying. In the beginning, people traded the goods they had for the goods they needed. This is known as the barter system. Bartering has several problems, most notably the coincidence of wants problem. Let's say a wheat farmer needs fruit. A direct swap of wheat for fruit is impractical because the fruit will spoil before the grain harvest. Money was created to solve this problem.

Here is a very educational film from the Ludwig von Mises Institute.



The Sumerians developed a large scale economy based upon commodity money with value based on a commodity out of which it is made. So, commodity money is an object that has value in itself as well as for use as money. Commodity money works well for buying things with a small value, but not so well for buying things of large value. For example, you would have to bring about 96 pounds of gold to the closing if you wanted to buy a $100,000 house.

Fast forward to recent history and banks started using representative money. Banks would issue a paper receipt to their depositors, indicating that the receipt was redeemable for whatever precious goods were being stored by the bank. Everything worked great because the paper money was backed by the commodities banks held in their vaults. This is known as the gold standard. Yes, there was a time when banks actually kept gold in their vaults equal to the paper money they had in circulation.

Governments throughout history have often allowed banks to give out more paper money than the commodities they had. This was usually allowed in times of need such as war. This was sometimes accomplished by suspending or limiting the exchange of money for gold, and other times by simply printing the money that they needed. Money that is not backed by a commodity is known as fiat currency and it only has value because a government has declared it to be legal tender for payment of taxes and debt. The gold standard is not currently used by any government in the world, because all central banks have replaced representative money completely with fiat currency. Credit money often exists in conjunction with other money such as fiat money or commodity money, and from the user's point of view is indistinguishable from it. Most of the western world's money is credit money derived from national fiat money currencies.

Central banks control monetary policy in most countries. The European Central Bank (ECB) was created by the European Union and controls the monetary policy of the 16 member States of the Eurozone. US monetary policy is controlled by the Federal Reserve (Fed). Canadian monetary policy is controlled by the Bank of Canada. Each of these central banks is based upon fiat currency. All central banks work pretty much the same way. Since the the U.S. dollar is the currency most used in international transactions, I will focus the rest of this post on the Fed.

The Fed was created in 1913 by the enactment of the Federal Reserve Act. The Federal Reserve Act was allowed to pass into law mainly as a results of a series of financial panics or bank runs. Over time, the roles and responsibilities of the Fed have expanded significantly. Events such as the Great Depression were some of the major factors leading to changes in the system. Today the Fed is accountable to no one. It has no budget and it is subject to no audit. There is no Congressional Committee that supervises or even knows of its operations.

The Fed operates for the benefit of its executive branch controllers, the banking industry, and Fed employees themselves, at the expense of the rest of society. The Fed creates economic instability which results in panic and financial meltdown. The worst part is that many Americans have been conned into believing that the Fed operates like the Wizard of Oz, hiding behind dark curtains, pulling levers and pushing buttons to make the economy operate smoothly.

For more than twenty years, the living standards of middle class Americans have steadily declined. Incomes have remained flat or falling and the opportunities and security we once took for granted have begun to fade. For most families, one income no longer pays the bills. It requires two or more incomes to afford a home, pay medical and childcare expenses, and put children through school. Unless present trends change, young workers are unlikely to ever live as well as their parents.

The Fed produces credit money, which it lends to the population. Every dollar in your wallet represents debt that you owe to the Fed. Debt is a form of slavery. So, basically, you are a slave to the financial elite who control the world banking system.

Even the current Fed Chief, Ben Bernanke, refuses to disclose the actions of the Fed to congress and refuses to make the Fed open to public scrutiny. Don't despair! You can do something about it!

Watch Senator Sanders questioning Bernanke



Support the Federal Reserve Transparency Act (HR 1207)

Sign the petition in support of HR 1207 and tell your Representatives to co-sponsor this bill.

Join the fight against the Fed!

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