There are many misconceptions about what the Federal Reserve is. First, there is nothing Federal about it. It is not owned or controlled by the Federal Government. It is a private entity whose shareholders are commercial banks, and their primary motivation is profit.
The next great misconception is that Congress oversees the actions of the Fed to keep them honest. It would be more accurate to say that Congress only waits to see the result of the decisions the Fed makes and can hold Congressional hearings about these actions later, to dubious effect.
The Fed gets money from the government with or without the go-ahead from Congress by performing what it calls “open market operations.”
When the government is short on cash, the Treasury issues bonds to bond dealers, who auction them off. When the Fed wants to create money, it buys bonds from these dealers using dollars created out of thin air.
It is as easy for the Fed to create money as it is for you to write numbers on a computer screen. In fact, the process is exactly the same.
The fact that we do not know this is due entirely to obfuscation. When the Fed wants to create money, it either does it quietly, or it comes up with a misleading explanation for what it is doing.
In short, the Fed creates money from nothing and launders that money by buying Treasury bonds. It is a shell game, and the American people are the marks.
“People of the nation do not understand our monetary system, if they did, we would have a revolution before morning.”
— Henry Ford
In the 1960s, Chairman of the House Banking and Currency Committee, Wright Patman, wrote:
“When the Federal Reserve writes a check for a government bond it does exactly what any bank does, it creates money, it created money purely and simply by writing themselves a check.”
In 1912, Woodrow Wilson, knowing that he did not possess the necessary expertise to reform the country’s financial and banking problems on his own, sought the advice of Virginia Representative Carter Glass and H. Parker Willis.
Glass was soon to become the House Committee on Banking and Finance chairman. Willis had been an economics professor at Lee and Washington Universities.
For most of that year, Willis and Glass worked to come up with a central bank proposal. There were a number of revisions made to it throughout the year conducted in secret meetings. By December, they had drafted what would become the Federal Reserve Act.
“I have unknowingly ruined my country. A great nation is controlled now by its system of credit. Our system of credit has become concentrated. The growth of our nation, and our activities are now in the hands of a few. We have become one of the worst ruled, one of the most wholly dominated and controlled governments in the world. No longer a democracy, no longer a government by judgment of conviction and the venerated vote of the majority, but a government by duress and the will of a concentrated group of dominant men”
— Woodrow Wilson
Before the Federal Reserve existed, all banks had the right and ability to create money out of thin air, just as the Fed does now. It was a problem that placed communities at the mercy of an individual bank.
Banks would create fiat currency at their pleasure or simply write themselves huge checks- driving down the value of the money belonging to those who held accounts at that bank. In those days, it wasn’t uncommon to see huge lines of people waiting to get into their local bank to remove all their money.
This was what financial experts were referring to when they spoke of the major problem that the financial system was laboring under- the ability of the people to pull their money out of their own accounts.
They saw it as a hindrance to the ability of banks to enrich themselves by creating debt. They wanted to solve the problem of people being able to control their own finances.
The answer was the centralization of credit. Today, regardless of whether or not a person develops so-named “bad credit” due to unfair lending practices hidden fees and inflation from artificially created money- people cannot escape the debt that is foisted on them in the form of damage to their credit. It is in this way that the Fed preys on the American people.
Regards,
Ethan Warrick
Editor
Wealth Authority
