Thomas Jefferson once warned, “If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered.”
Even though Jefferson made that statement over 230 years ago, he was warning us against what we now know as the Federal Reserve System. When individuals are asked what the Federal Reserve System is, the reply is often a crinkled brow of thought then a puzzled shoulder shrug. Some people will manage to mention that the Federal Reserve (FED) is a government agency that controls the issuance and regulation of our money supply.
The FED does control our money supply, and implements the nation’s fiscal policy but it is not a government agency. The Federal Reserve System is one of the most powerful private banking cartels in the World and it has financially enslaved the people of the United States for almost a century now.
Henry Ford, founder of the Ford Motor Company said, “It is well enough that the people of this nation do not understand our banking and monetary system, for if they did, I believe there would be revolution before tomorrow morning.”
A cartel is defined as a combination of independent business organizations formed to regulate production, pricing, and marketing of goods by the members.
To understand how collusion takes place in the Federal Reserve one must know the history of fractional banking. Fractional Banking is the ability to create money from nothing, lend it to the government or another consumer and charge interest on this fiat money. This practice dates back to the time of goldsmiths.
These goldsmiths would rent out space in their vaults to individuals and merchants for storage of their gold or silver. A depositor receipt would be given to show the amount of gold or silver stored in the goldsmiths vault. After time the goldsmiths noticed that small amounts of the overall reserves would move in and out of the vault but the majority of the wealth would stay in the vault. This was due to the fact that on the market the depositor receipts acted like currency. The goldsmiths quickly realized a chance for profits by issuing double receipts for the gold and silver, in effect creating money(certificates) from nothing and lending those certificates to others charging interest.
Since the certificates represented more gold than actually existed, the certificates were “fractionally” backed by gold. The United States has used the fractional banking system since its birth in 1776, however since 1933 there has been no gold standard backing our currency.
England also uses this fractional banking system and has since 1694 when William III granted a royal charter to the concept of a “monopoly” bank which would create money for loans that would never be repaid and the permanent National Debt was born.
By the time of the discovery of the new World, England had used this policy to the point of market collapse. England saw the colonies as a chance to make more profit with taxes and the control of money issue. The founding fathers fought a long and expensive war against the British rule and won, almost. When England lost the Revolutionary War with America, they planned to control us by controlling our banking system, the printing of our money, and our debt.
Meanwhile, the founding fathers were heavily debating the economic model for the United States. Both Thomas Jefferson and James Madison wanted additional amendments in the constitution that would protect the people from monopolies but could not come to an agreement.
The First Bank of the United States was created in 1791 and chartered for 20 years but was not renewed due to public outrage over policy. The Second Bank of theUnited States was established in 1816 and doubled the amount of banks in the country in a short amount of time. The country began to boom and move westward then the bank stopped printing money in order to control inflation. The result was many bankruptcies and foreclosures which the bank then took control over those assets that were used as security against the loans.
Looking closely at this Second Bank of the United States it is clear that the bank caused inflation by printing more money than was backed and then the bank constricted the money supply causing deflation. This process is exactly the one that Thomas Jefferson warned against in the earlier quote.
The second bank’s charter ran out in 1836. From 1836 to 1913 the United States operated without a central bank and it has been said to be the most prosperous time of the country. What followed would be the greatest injustice against the American people ever to be committed.
The elite bankers, foreign and domestic, who owned the first two United States Banks, saw the financial prosperity that elapsed after 1836 and they wanted it, all of it. After a panic in 1907, purportedly caused by J.P. Morgan, the bankers would meet in secret to discuss the formulation of what would eventually become a banking monopoly.(5) J.P. Morgan, William Rockefeller, Charles Norton, Paul Warburg, Frank Vanderlip, Benjamin Strong and Senator Nelson Aldrich, who was the maternal godfather to the Rockefellers, met at a Jekyll Island in 1909. Jekyll Island is a private club off the coast of Georgia in which the men met to collude on a bill Sen. Aldrich was about to introduce.(5) At Jekyll Island, the true draftsman for the Federal Reserve was Paul Warburg.(5) The plan was simple. The new central bank could not be called a central bank because America did not want one, so it had to be given a deceptive name. Ostensibly, the bank was to be controlled by Congress, but a majority of its members were to be selected by the private banks that would own its stock.(5) To keep the public from thinking that the Federal Reserve would be controlled from New York, a system of twelve regional banks was designed. Given the concentration of money and credit in New York, the Federal Reserve Bank of New York controlled the system, making the regional concept initially nothing but a ruse. (5) The board and chairman were to be selected by the President, but in the words of Colonel Edward House, the board would serve such a term as to, “put them out of the power of the President.”(11) The power over the creation of money was to be taken from the people and placed in the hands of private bankers who could expand or contract credit as they felt best suited their needs.(5) When one imagines a powerful person the first thought that comes to mind is wealth, now ..:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” />
imagine if that person had the ability to create money unregulated and charge everyone for its use.
The Federal Reserve Act of 1913 was introduced in late December by Senator Aldrich. The legislation establishing it was so harmful to the public interest, it likely never would have passed if it hadn’t been shepherded through a carefully prepared Congressional Conference Committee meeting scheduled for between 1:30 – 4:30 AM (when most members of Congress were asleep) on December 22, 1913.(7) The Act was then voted on the next day and passed although many members of the body had left for the Christmas holidays and most others who stayed behind hadn’t had time to read it or know its contents.(8) Still it passed (like a thief in the night) and was signed into law by an unwitting or complicit Woodrow Wilson who later admitted he made a terrible mistake saying,
I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men.
The Federal Reserve System is the result of the Congress and President having agreed to privatize the nation’s money system and relinquish the power that should have remained the government’s exclusive right. Article 1, Section 8 of the Constitution states that Congress shall have the power to coin (create) money and regulate the value thereof.(7)
Also according to this Article Congress does not have the authority to delegate this responsibility? That act was so outrageous the Fed had to be deliberately designed to look like a branch of the federal government to hide the fact that it’s really an all-powerful privately owned banking cartel whose member banks,including all the national ones, share in the vast profits earned from having the most important of all franchises governments alone should have.(7) The right to print money in any amount, control its supply and price, and benefit hugely by loaning it out for a profit including to the government itself that must pay interest on the money it should never have to if it simply printed its own. Think of what happened as the government having legalized the right to counterfeit the national currency for private gain.(8) It’s no exaggeration to claim this is the greatest ever of all financial scams causing incomprehensible harm with the public none the wiser. The Fed was given the authority to conduct the nation’s monetary policy with the power to control the supply and price of money. It has three ways to do it – through open market operations, the discount rate it charges member banks, and the reserve requirement percentage of member banks assets it requires them to hold and not loan out. The Board of Governors is responsible for handling the discount rate and reserve requirements while the Federal Open Market Committee (FOMC) is in charge of
the open market operations of buying or selling bonds explained further below. Using these tools, the Fed is able to influence the supply and demand for money and thus directly control the federal funds short-term rate that’s always fixed unless the Fed wishes to raise or lower it. Longer rates are controlled by the powerful institutional traders in the bond market. The Federal Open Market Committee is the key to the whole process of money creation or contraction. It consists of 12 members – seven members of the Board of Fed Governors, the president of the New York Fed Bank (the most important one of all) and four of the remaining 11 Reserve Bank presidents who serve one year terms on a rotating basis.(11)
The FOMC literally has the power to create money out of nothing. It does it in a four step process:
Step 1 – The FOMC first approves the purchase of US government bonds on the open market.
Step 2 – The New York Fed bank buys them from sellers (financial markets always have an equal number of buyers and sellers).
Step 3 – The Fed pays for its purchases with electronic credits to the sellers’ banks, which, in turn, credit the sellers’ bank accounts. These credits are literally created out of nothing.
Step 4 – The banks receiving the credits can then use them as reserves to enable them to loan out as much as 10 times their amount (if their reserve requirement is 10%) through the magic (only banks have) of fractional reserve banking and, of course, collect interest on all of it. What a business, and it’s all legal. Imagine how
rich we might all be if we as private individuals could do the same thing. Borrow a million from the Fed and like magic it becomes 10 times as much and we get to collect interest on all but the 10% of it we must hold in reserve. This is the magic of fractional reserve banking money creation and explains how powerful an economic stimulus it is when the Fed wants to enhance economic growth. (11)
The Federal Reserve System exists only to serve its owners and member banks and in doing so is hostile to the public interest. That’s because it’s a banking cartel with the power to restrict competition for greater profits gained at our expense. It goes from our pockets to theirs, and the public loses in at least four ways:
One - Through the invisible tax of inflation that results from the dilution of purchasing power caused by newly created money entering the system reducing the value of dollars already there. The Greenspan Fed was especially expansive, never was held to account for its excess and was able to pass a serious problem it created on to a future Fed chairman and society to deal with. The man we now lionize as a monetary magician began sensibly. From 1982, before he arrived in 1987, until 1992, the money supply increased on average by 8% a year. But from 1992 – 2002, the printing press worked overtime in sync with the deregulation and growth of global markets expanding the currency by more than 12% a year. It became even more extreme post 9/11 and since 2002 grew at a 15% rate. It now has more than doubled in less than a decade. It appears that the new Fed chairman has taken note and has begun reducing the rate of money expansion as he continues raising the federal funds rate to whatever level he has in mind.
Currency traders as well apparently have taken note of the rate of money supply expansion overall. Except for a respite in 2005, it’s quite likely the dollar weakness since 2002 is the result of the excess amount of them created for the Bush administration’s profligate spending to fund its endless wars and reckless tax cuts for the rich. The problem is further compounded as from 1964 to the present debt service has grown from 9% to 16.5% of the federal budget and rising; the current account deficit has gone from a 1% surplus to an almost 7% deficit; and federal indebtedness has grown by 40% just since 2001 and financed in large part by “the kindness of (foreign) strangers” that may be growing restive.(11) Furthermore, since March, 2006, the Fed stopped publishing the M-3 aggregate of the total amount of dollars in circulation.(8) With that transparency gone, big buyers of US Treasuries now have to calculate the value of the dollar based on speculation and uncertainty rather than hard data – not a way to inspire trust in the financial markets that function best in an atmosphere of openness and clarity.(4)
Two - The public also loses because the banking cartel is able to practice usury – from its power over a flexible currency to artificially move rates up or down to any level it chooses which many small lenders in a truly free and open market can’t do. In addition, the cartel’s market dominance forces most borrowers (especially smaller ones less able to issue their own debt instruments) to come to them for loans which it’s then able to make using what should be the peoples’ money available to them at the lowest possible cost from many highly government regulated small lenders competing for customers.(5)
Three - Through the taxes, we, the public, must pay to cover the interest on the huge national debt (now over $8.4 trillion) accumulated from the money the Fed printed and loaned to the government.(11) Meaning that the United States Budget Deficit is no more than a tab we owe to the FED and to cover the bonds issued for using the Federal Reserve notes. Now the deficit totals an annualized amount exceeding two-thirds of a trillion dollars and increasing daily. It’s made the banker’s rich, ordinary people poorer and the public none the wiser it’s been fleeced big time.
Four - Compounding the above abuse, the cartel is able to get the public to bail out the system with more of its tax dollars. It happens whenever any of the too-big-to-fail banks need financial help to survive. The same is true for big corporations like Chrysler or Lockheed, large investment firms or hedge funds like Long-Term Capital Management or even countries like Mexico. It’s also true when a single bank goes out of business and depositors must be compensated or more seriously in the wake of a systemic financial meltdown like the one that wiped out many savings and loan banks in the 1980s. Whether it’s a single bank or many dozens at a time, public tax dollars are used to save the system or just pick up the tab to repay depositors insured against losses through government insurance protection up to a stipulated amount per account
The Fed harms the public welfare in one other important way, and again most people are none the wiser about it. Supposedly the Federal Reserve System was established to stabilize the economy, smooth out the business cycle, maintain a healthy rate of sustainable growth while holding prices steady and benefiting everyone. So how well has
it done its job? Since its creation in 1913, and with them in charge, we had the crashes of 1921 and the most important and remembered one in 1929. That was followed by The Great Depression that lasted until the onset of World War II that noted conservative economist Milton Friedman explained was caused and exacerbated because the Federal Reserve oddly decided to reduce the money supply at a time of economic contraction instead of increasing it.(7) We then had recessions in 1953, 1957, 1969, 1975, 1981, 1990 and 2001. We also had inflation beginning in the 1960s which became quite severe through much of the 1970s and early 1980s. And we had a major banking crisis in the 1980s at which time more banks and savings and loan associations failed than ever before in our history. It happened in the wake of financial market deregulation when banks were allowed to pursue their own interests without government oversight to check their willingness to assume excess risk or stop them from trying to get away with deliberate fraud. Along with the economic stability the Fed never achieved, we’ve also had soaring consumer debt; record high federal budget and trade deficits; a high level of personal bankruptcies and rising mortgage loan delinquencies; interest on a mounting national debt that’s a large and rising percentage of the federal budget; the loss of our manufacturing base and it’s high-paying jobs with good benefits because they’re being exported to low wage countries; an economy in which services now account for nearly 80% of all business that provide mostly lower paying, less skilled jobs with few or no benefits; and a widening income and wealth gap that continues to harm lower and middle income earners to benefit the rich and well-off privileged few and a government that encourages it.(4)
This information can be overwhelming but it was designed that way to keep the public in the dark. The bottom line is that the Federal Reserve is an illegal banking entity that harms us all. This paper was meant to be in respect to a Microeconomics subject but how can one worry about the price-cost relationship of a single firm when the entire system is corrupted. This whole problem could be regulated and changed if only Congress took back the responsibilities that are intrinsically theirs to coin and regulate currency. This has been tried by three previous Presidents and the result was either assassinations or mysterious deaths of those Presidents but that is for another paper.
An Introduction to the Articles of Freedom
Think of the millions of folks, including members of the Armed Forces, who have raised their right hand and said, “I, (NAME), do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter. So help me God.”
Think of the millions who have placed their right hand over their heart and said, “I pledge Allegiance to the flag of the United States of America and to the Republic for which it stands, one Nation under God, indivisible, with Liberty and Justice for all.”
How could anyone who has pledged their devotion to the Constitution, reconcile the following violations of the Constitution that are destroying America? When will it end?
- For decades, our Government has been meddling in the internal affairs of other countries, without any Constitutional authority, causing foreign nationals to direct their hostilities towards us, which has given us a War on Terror and a growing Police State that is repugnant to the Fourth Amendment and the General Welfare of a Free People;
- For decades, we have had undeclared wars in violation of the War Powers clauses of Articles I and II;
- We are now gifting and lending public money and credit to private corporations for decidedly private purposes (corporate welfare), without any constitutional authority, whatsoever;
- We have a fiat currency, in violation of the money clauses of Article I;
- We have been emitting trillions of dollars worth of Bills of Credit through or under the auspices of the Federal Reserve Systemin violation of Article I;
- We have been incurring trillions of dollars worth of debt for the payment of expenditures for programs and activities that are not enumerated in Article I, and therefore not authorized;
- We have a fraudulently ratified 16th Amendment in violation of Article V, a direct, un-apportioned tax on labor in violation of the tax clauses of Article I, and a judicial system that refuses to consider the evidence, in violation of Article III;
- For decades we have had unenforced immigration laws in violation of that mandate, plainly-worded in Article II, that requires the President to “faithfully execute” all the laws passed by Congress;
- We have a President who apparently is not a natural born citizen, a violation of Article II;
- We are counting our votes in secret, as all machines do, in violation of our constitutional right not only to vote but to know that our votes are being accurately counted;
- We have an absence of well-regulated state militias, and we have federal gun control laws, all in violation of the Second Amendment;
- For decades, in violation of the sovereignty clauses of the Declaration of Independence, the United States has been entering into treaties, contracts and relationships with foreign entities, and giving authority to international bodies, dissipating, destroying and undermining America’s sovereignty;
- We have private land being taken for private purposes in violation of the Fifth Amendment.
- We have a Government about to become a provider of Health Care, and about to order the People to purchase a product, powers that are not enumerated in Article I, and therefore not authorized.
- We have money bills originating in the Senate, in violation of Article I.
- We have a Senate that is using a supermajority vote to decide whether to enact a law, without an amendment to the Constitution, all in violation of Article I, Sections 3 and 5, and Article 5.
These violations have challenged the Constitutional Republic of the United States and Her People to Its core.
Above all, we have government officials who, for fourteen years, and more, have refused to honor their fundamental obligation to respond to the People’s First Amendment Petitions to Redress these violations. I call this the “capstone grievance.”
It is well settled in American Jurisprudence that if anyone has an obligation to respond and he fails to do so, his silence amounts to admission. It is also well settled that any Right that is not enforceable is not a Right – that is, with every Right there is a Remedy. However, the Constitution cannot defend itself. It is the duty of the People to defend it.
The We The People Foundation exists for the purpose of protecting and defending our federal and state Constitutions and to ensure the day comes when the American People will have institutionalized citizen vigilance for the purpose of routinely holding their elected officials accountable to their Constitutions, regardless of their political stripes and whether they voted for them.
The vision for Continental Congress 2009 came in December of 2008, while I was preparing to give a speech at Faneuil Hall in Boston. The idea was well received. From January 1 – May 1, I traveled to 88 cities in all 50 states to meet with People to see if this was an idea they would support and help make a reality. They agreed.
On May 21, the Foundation sponsored a meeting of leaders of the Freedom movement at the Jekyll Island Club in Georgia. This was the place where the Federal Reserve was first conceived in 1910. We stood in the Federal Reserve Room, as it is called, and asked our Creator to put a new and righteous record for America in the place of what had gone before. We believe our prayers were answered. We discussed Continental Congress 2009 and if this was an idea they could support and help make a reality. They all agreed.
From June 1 – October 10, a national structure was established to accommodate Continental Congress 2009. State coordinators in nearly every state volunteered their time and energy along with other citizens. A small national management team formed to assist. Delegates were nominated in each state to attend the Congress.
A Constitutionally – correct election was held on October 10. On November 11, 2009, the delegates attended Continental Congress 2009 at the Pheasant Run Conference Center in St. Charles, Illinois, sponsored by the Foundation. The Delegates of Continental Congress 2009 were not professional legislators or wordsmiths. They were ordinary, non-aligned citizens from across America and all walks of life. They set aside their lives for this Assembly. They represented You and Me, the Free People of America.
The conclusion of their efforts, their recommended Course of Action to restore and maintain Constitutional obedience in America, is This Document called ‘‘Articles of Freedom.’’
It is proposed that these Articles be distributed to All in the Land, with the intent to draw the attention and courage of a “goodly number of millions of People” who, entitled to their Freedom and essential to Its maintenance, Arise to Restore and maintain the Constitution for the United States of America.
Then and only then shall America’s Destiny be Fulfilled.
Please take the time to read the Articles of Freedom. Learn about the Constitution. Take the Pledge to stand with millions of Americans as the Articles of Freedom are served on our elected officials, and then, if necessary, to participate in coordinated, non-violent, legal and Constitutional civic actions to stop the violations.
Founder and Chairman
We The People Foundation for Constitutional Education, Inc.
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