The Federal Reserve and the Control of Money
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A Private Cartel of Bankers
After the run on American banks in 1907, another attempt was made to establish a privately owned cartel of bankers which resulted in the Federal Reserve Act being passed by Congress in 1913, and the establishment of the Federal Reserve. The argument for it ran along the lines that in establishing a central bank which was exempt from having to be audited or of having to report to government, financial stability would prevail. Control of money would rest in the hands of the central bank, which would print money in exchange for treasury notes, and the money would then be lent by banks to consumers at interest. A great idea as far as the bankers were concerned, but for the government, and consumers, nothing less than a nightmare which has resulted in a debt spiral in the trillions of dollars today, a spiral that will never be paid or eliminated.
Central Banks and Debt
The history of central banking, where the central bank is owned by a cartel of private bankers, dates back to the 17th century when the Bank of England was established, with the model being subsequently used over and over again throughout the world to establish more central banks, so that today, most countries function through a central bank, with debt out of control. The belief that by establishing a central bank, stability would be brought to financial markets, was pure fantasy, as booms, bubbles, and busts from the time the Federal Reserve was established testify. The 2008 financial crisis in part was caused by Fed Chairman, Alan Greenspan’s and Treasury Secretary, Larry Somer’s refusal to regulate the financial markets under the free market principles championed by economics professor, Milton Friedman, thus allowing for unprecedented greed within the markets to destabilize them through the use of derivative instruments known as collateralized debt obligations and credit default swaps where lenders could palm off debt payment responsibility to outside investors, thus relieving themselves of any financial obligation to ensure that debts could and would be repaid.
No-one cared in the end, and as a result, giants in the industry, such as Lehman Brothers, collapsed. The insurance company, AIG, which had been insuring potential losses through the use of credit default swaps, had to bailed out by the government in order to prevent a full scale domino effect from occurring. There was no doubt that the Treasury Department and the Federal Reserve were in panic mode, and had to pull out all stops to prevent not a recession, but a depression.
It is obvious there is a revolving door between Wall St., and government. Henry Paulson, just one example, served as the 74th Secretary of the Treasury, formerly holding the position of Chief Executive Officer of the largest investment bank in the world, Goldman Sachs. It was the practices and policies of investment banks such as Goldman Sachs and Lehman Brothers, that led to the 2008 financial crisis, so the players in that game also provided the solution which was not a pretty one by any means, resulting in government debt ballooning into the stratosphere, and the American taxpayer footing the bill.
Did President Woodrow Wilson unwittingly, or unknowingly sign away the American dream just over a century ago? Did he not take into account the words and actions of previous presidents, such as Andrew Jackson, who vehemently opposed a central banking system which was privately owned? Wilson did come to regret his decision to sign into law the Federal Reserve Act, but that is history now. The passing of 100 years has allowed for observation to occur, and the observations are telling. Wealth in the United States has slowly but surely been transferred from middle class America to the powerful elite, the top 1%. Just prior to President Obama’s State of the Union Address in 2014, the media reported that the top wealthiest 1% of citizens owned 40% of the nation’s wealth, with the bottom 80% only owning 7% of the wealth, with the gap between the top 10%, and middle class America being over 1,000%. Presidential candidate, Senator Bernie Sanders argues that the top one-tenth of the 1% own as nearly as much wealth as the bottom 90%, and that such a situation is completely unacceptable. Can it be argued that the Federal Reserve has allowed this to occur? Given the economic policies coming out of Harvard, along with the free market economic theories of Milton Friedman which were supported by Fed Chairman’s Alan Greenspan and Ben Bernanke, along with Treasury Secretarys’ Larry Somers, Henry Paulson and Timothy Geithner, it is fairly difficult to state these players are innocent of any wrongdoing.
Ever Mounting Debt
Will the octopus like arms of central banks be with us forever now? Will humans continue to labour under a system of mounting debt, hardship, financial pressures, and stress, or will the central banking system owned by a cartel of private bankers, have to go? Do governments have the courage to shut the central banking system down, and print their own money instead, as President Abraham Lincoln managed to do with the greenback? Is it moral and ethical that a private cartel of bankers can control the money supply? Why bother electing a president if said president has no say in who can print money, and furthermore, has no control over it?
The following documentary, titled Century of Enslavement: The History of the Federal Reserve, is aptly named because one can ask whether the enslavement will continue, or cease:
- Wealth Inequality in the United States by Wikipedia
- Bernie Sanders, in Madison, claims top 0.1% of Americans have almost as much wealth as bottom 90% by Tom Kertscher
- Eccles Federal Reserve Board Building by AgnosticPreachersKid Licence
- Dr. Alan Greenspan, former Chairman of the Board of Governors of the Federal Reserve, speaks at the Per Jacobsson Foundation Lecture, October 21, 2007 in Washington, DC. Photograph by Stephen Jaffe
- Federal Reserve Chairman Ben Bernanke. Photograph by Peter Larson of Medill News Service
Tags: Federal Reserve, The 2008 Financial Crisis, wealth distribution