By Alan Caruba
In the November issue of The DeWeese Report, published by the American Policy Center, Tom DeWeese provides one of the most cogent explanations for the current financial crisis that you will read anywhere. You can read it online at http://www.americanpolicy.org/more/market.htm.
For a decade I was the Director of Communications for the Center and remain affiliated. In a time when the need for truth and straight talk is critical, you might well want to join and support the Center.
The November issue contains a speech that was made on the floor of the House of Representatives by Louis McFadden, Chairman of the House Banking and Currency Committee. The year was 1934 in the midst of the Great Depression. Here are some excerpts:
“We have in the country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve Banks, hereinafter called the FED. The Fed has cheated the government of these United States and the people of the United States out of enough money to pay the nation’s debt…many times over.”
How timely this is as the U.S. treasury is being raided to bail out banks, an insurance company, investment firms, and possibly individual auto companies and others to the tune of billions.
In 1934, McFadden noted that “This evil institution has impoverished and ruined the people of the United States, has bankrupted itself and has practically bankrupted our government.” What we are witnessing, of course, is the devaluation of the U.S. dollar and this must be laid at the feet of the Fed, the institution that was created to protect its value.
“Some people think that the Federal Reserve Banks are United States government institutions,” said McFadden. “They are private monopolies which prey upon the people of the United States for the benefit of themselves and their foreign customers: foreign and domestic speculators and swindlers; and rich and predatory money lenders.”
Consider how the present financial crisis was the direct result of government mandates that banks and other lending companies had to provide mortgage loans to people that otherwise would never have received them had prudent banking practices been allowed to function.
“The United States has been ransacked and pillaged. Our structures have been gutted and only the walls are left standing…What we need to do is send the reserves of our national banks home to the people who earned and produced them, and who still own them, and to the banks which were compelled to surrender them to predatory interests.”
This is precisely why banking and investment institutions “bundled” and sold mortgage loans as alleged “assets” for which no value could be assigned, knowing that Freddie Mac and Fannie Mae were backed by the U.S. government. As Tom DeWeese says in his commentary, “These were worthless loans to satisfy politically correct motives, and worthless money to pay for it all.”
The global impact of the U.S. financial crisis was anticipated by McFadden who called the Fed “a public trough of American wealth in which the foreigners claim rights to or greater than Americans…All this is done at the expense of the United States government and at a sickening loss to the American people.”
For those who might be tempted to dismiss those remarks from 74 years ago, I can tell you that I recently talked with a former Fed auditor who confirmed that its oversight of banks was and is farcical. “We were dealing with people who knew the regulations inside and out, who knew all the loopholes. It was not unusual for us to spend our days working The New York Times crossword puzzle to pass the time.”
The current Secretary of the Treasury, Henry Paulson, who announced a financial crisis rather conveniently for Barack Obama just before Election Day has now announced that plans for the $700 billion bailout money have changed. No more buying of “toxic paper” because, after all, it is worthless. The taxpayer’s money will now be redirected. Where? We have not been informed. The nation is being run these days by Goldman Sachs.
The Fed is a quasi-government institution. It is a consortium of twelve regional banks that is presumed to be answerable to the federal government. Under the regime of Alan Greenspan, its former chairman, it permitted, indeed, encouraged this debacle to occur. It is time to end the reign of the Federal Reserve. It was time in 1934.
Americans are watching the plundering and looting of the U.S. Treasury for political and private gain. Apparently, there is nothing we can do about it.