Saturday, February 18, 2012
The Federal Reserve Rip-Off
By Alan Caruba
I have not been kind to Ron Paul and his participation in the Republican primary campaigns and it has taken me a while to understand why he is doing this. It is clear that he wants to be around to influence the Republican platform and the issue about which he is abundantly correct is the Federal Reserve.
Anyone taking notice of Obama’s latest budget has to conclude that his mission is to crash the nation’s economy and turn America into a Socialist worker’s paradise. The only problem is that Socialism has been a dismal failure everywhere it has been tried.
One only has to look at the collapse of the Soviet Union for confirmation of that, the Chinese abandonment of Communist economic theory, and Obama’s odd notion that a nation can spend itself out of ever-increasing debt.
I am not a fan of Paul’s isolationism, but he is absolutely right about getting rid of the Federal Reserve.
Established in 1913, the same year income taxes were instituted, the Reserve is not part of the federal government. It is, in fact, privately owned by a consortium of banks and that might include foreign banks as well.
In a remarkable essay, “10 Things That Every American Should Know About The Federal Reserve” by Michael T. Snyder, it is clear that the Constitution intended to have the U.S. Treasury to be soley responsible to “coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures.”
Snyder points out that the Federal Reserve System (the Fed) is a privately owned banking cartel and one granted the right to create money out of thin air.
It is, says Synder “a perpetual debt machine because “whenever more money is created, more debt is created as well.” On top of its ability to create money, the government then borrows it, increasing the cost to taxpayers by way of the interest that must be paid to the Fed.
The government issues U.S. Treasury bonds with which to secure a loan from the Fed and it, in turn, sells them to others. Money from nothing; interest on that money, and earnings from the U.S. Treasury bonds it then sells!
Synder noted that in fiscal 2011 the U.S. government paid out $454 billion just in interest on the national debt. “The truth is that our current debt-based monetary system was designed by greedy bankers that wanted to make enormous profits by using the Federal Reserve as a tool to create money out of thin air and lend it to the U.S. government at interest.”
“On July 1, 1914 (a few months after the Fed was created) the U.S. national debt was $2.9 billion dollars. Today it is more than 5,000 times larger.”
If Rep. Paul can convince enough people to end the Federal Reserve Americans might actually learn how many trillions it loans to “too big to fail” Wall Street banking institutions as well as to foreign banks, generally without oversight by the Congress.
The previous Chairman of the Fed, Alan Greenspan, confessed to be totally astonished by the housing bubble that led to the 2008 financial crisis, His successor, Ben Bernanke, the current Chairman of the Fed, has been consistently wrong about the economy since taking office. In 2005 Bernanke said that housing prices had never declined on a nationwide basis and predicted full employment as far as the eye could see.
Those mysterious financial instruments, derivatives, were perfectly safe said Bernanke.
In 2008, he was still predicting housing prices would probably keep rising. In 2007 he saw no problem with the subprime mortgages that two “government sponsored entities”, Fannie Mae and Freddie Mac, kept pressuring banks to make. “A few months before Fannie Mae and Freddie Mac collapsed, Bernanke said ‘The GSEs are adequately capitalized. They are in no danger of failing.’”
Any CEO or CFO with a record like that would be out on the street looking for a job. And this man is still in charge of the Federal Reserve.
The latest budget put forth by the Obama administration demonstrates the same level of incompetence and wishful thinking. “All the voters need to do is suspend belief for another nine months. And ignore the first four years,” opined The Wall Street Journal.
The budget essentially says that what a government that is deeply in debt---with the size of it growing daily---has to do is to borrow and spend more! And, oh yes, Obama wants to raise taxes on everyone and everything.
While I would not vote for Rep. Paul to be President, I applaud his lonely campaign to get Americans to think about ridding the nation of the Federal Reserve and to begin exercising fiscal restraint before we become the next Greece, Spain, Portugal, Italy or France.
© Alan Caruba, 2012