11 Reasons Why The Federal Reserve Is Bad

Millions of Americans are waking up to the fact that the Federal Reserve is bad, but very few of them can coherently explain why this is true.  For decades, an unelected, privately-owned central bank has controlled America’s currency, run our economy and has driven the U.S. government to the brink of bankruptcy.  It operates in great secrecy, it has never been subjected to a comprehensive audit and yet the actions it takes have an impact on every single American.  It is an institution designed to drain wealth from the U.S. government (and ultimately from the American people) and transfer it to the ultra-wealthy.  Have you ever wondered why a sovereign nation such as the United States has to borrow United States dollars from anyone?  Have you ever wondered why a sovereign nation such as the United States does not even issue its own currency?  Have you ever wondered why we allow a group of unelected private bankers to run our economy?

Those are some very important questions.  Hopefully what you are about to read will open the eyes of many.  The truth is that our financial system is centrally-controlled and centrally-managed by a group of banking oligarchs who have constructed an ever-expanding debt spiral which has been efficiently designed to slowly transfer all wealth into their hands.

The following are 11 reasons why the Federal Reserve is not good for the United States….

1 – The Federal Reserve was created as a way to enslave the U.S. government with debt.  The truth is that the U.S. government only goes into debt if it chooses to.  Theoretically, one day that U.S. government could simply decide to print as many U.S. dollars as it wants and pay off all government debts.  But under the current system that is not allowed.  You see, today the U.S. government does not issue any money.  The Federal Reserve issues all money.  That is why they are called “Federal Reserve notes”.

Under the current regime, whenever the U.S. government wants more currency to be created it has to go into more debt.

In a previous article entitled “It Is Now Mathematically Impossible To Pay Off The U.S. National Debt” I explained how this insidious system works….

If you will pull a dollar bill out and take a look at it, you will notice that it says “Federal Reserve Note” at the top.

It belongs to the Federal Reserve.

The U.S. government cannot simply go out and create new money whenever it wants under our current system.

Instead, it must get it from the Federal Reserve.

So, when the U.S. government needs to borrow more money (which happens a lot these days) it goes over to the Federal Reserve and asks them for some more green pieces of paper called Federal Reserve Notes.   

The Federal Reserve swaps these green pieces of paper for pink pieces of paper called U.S. Treasury bonds. The Federal Reserve either sells these U.S. Treasury bonds or they keep the bonds for themselves (which happens a lot these days).

So that is how the U.S. government gets more green pieces of paper called “U.S. dollars” to put into circulation. But by doing so, they get themselves into even more debt which they will owe even more interest on.

So every time the U.S. government does this, the national debt gets even bigger and the interest on that debt gets even bigger.

Now, apologists for the Federal Reserve system are quick to point out that the Federal Reserve does not make much of a profit.   Once a “statutory dividend” of 6% is paid to member banks and a capital account surplus is “maintained”, the rest of the profits of the Federal Reserve go back to the U.S. Treasury.

Problem solved, right?

Wrong.

The point is not how much of a profit the Federal Reserve makes or does not make.

The point is that the Federal Reserve is a tool for creating U.S. government debt which slowly drains our national wealth and which ends up greatly enriching the global elite.

As of July 1st, the U.S. government had spent $355 billion so far in 2010 on interest payments to the holders of the national debt.

Have you ever wondered who gets all that money?

The truth is that the wealthiest individuals around the globe have been getting very rich for a very long time off of government debt.

2 – The Federal Reserve creates money out of thin air.  In a previous article, I noted how this fact comes out in congressional hearings and yet the American people just don’t seem to get too upset about it….

During a recent Joint Economic Committee hearing on Capital Hill, U.S. Representative Ron Paul directly confronted Federal Reserve Chairman Ben Bernanke about this 1.3 trillion dollars.  As Ron Paul described how this 1.3 trillion was just created out of thin air, all Bernanke could do was nod his head.  Why?  Because it was the truth.

3– The huge predator megabanks that now dominate the U.S. banking system use the Federal Reserve as a tool to make money.  One of the ways they do this is called the U.S. Treasury carry trade.  What happens is that the Federal Reserve lends huge amounts of money to the megabanks for next to nothing, and then these megabanks use all that cash to buy U.S. government debt.  This little “trick” helped enable four of the biggest U.S. banks (Goldman Sachs, JPMorgan Chase, Bank of America and Citigroup) to have a “perfect quarter” with zero days of trading losses during the first quarter of 2010.  Wouldn’t you like to have a perfect batting average?

4 – The Federal Reserve devalues our currency.  Since the Federal Reserve was created in 1913, the U.S. dollar has lost 96 percent of its purchasing power.  The truth is that just a two percent inflation rate will wipe out half of your purchasing power within a single generation.  In the chart below, you can clearly see that the beginning of the rapid rise of inflation in the United States coincided with the creation of the Federal Reserve….

5 – The Federal Reserve manipulates the U.S. economy by setting national interest rates.  By keeping rates high or low, the Federal Reserve has the power to create economic growth or to destroy it.  They have the power to inflate massive bubbles and to pop them.  Most Americans give way too much credit and blame to presidents like Bush or Obama for how the economy is doing.  The truth is that they really don’t have that much control over the economy compared to the Federal Reserve.

6 – The Federal Reserve also controls the  national money supply.  They can pump trillions into the economy or pull trillions out without being accountable to anyone.  This can have disastrous consequences.  For example, after the U.S. stock market crash of 1929, the Federal Reserve continued to contract the money supply.  Many analysts believe that this was one of the key things that precipitated the Great Depression.

7– The Federal Reserve is not part of the U.S. government.  The truth is that the Federal Reserve is about as “federal” as Federal Express is.  In defending itself against a Bloomberg request for information under the Freedom of Information Act, the Federal Reserve objected by declaring that it was “not an agency” of the U.S. government and therefore it was not subject to the Freedom of Information Act.  It is kind of funny how Fed officials are always talking about how important their “independence” is, but whenever anyone starts criticizing them for being private they start stressing their ties with the government.

8 – The Federal Reserve has become far, far too powerful.  The reality is that those running the Federal Reserve are not elected and yet have an enormous amount of control.  In fact, Ron Paul recently told MSNBC that he believes that the Federal Reserve is more powerful than Congress…..

“The regulations should be on the Federal Reserve. We should have transparency of the Federal Reserve. They can create trillions of dollars to bail out their friends, and we don’t even have any transparency of this. They’re more powerful than the Congress.”

9– The Federal Reserve is dominated by Wall Street and the New York banks.  The New York representative is the only permanent member of the Federal Open Market Committee, while other regional banks rotate in 2 and 3 year intervals.  The former head of the New York Fed, Timothy Geithner, is now U.S. Treasury Secretary.  The truth is that the Federal Reserve Bank of New York has always been the most important of the regional Fed banks by far, and in turn the Federal Reserve Bank of New York has always been dominated by Wall Street and the major New York banks.

10– Federal Reserve Chairman Ben Bernanke wants to completely eliminate minimum reserve requirements for banks.  Fractional reserve banking has always been a way that the bankers have conned the public, but now Bernanke wants to get rid of the pretense of “reserves” altogether.

It is almost too bizarre to believe, but it is right there in black and white on the Federal Reserve’s own website….

The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system.

11 – The Federal Reserve is not accountable to anyone.  The Federal Reserve has never undergone a true comprehensive audit since it was created back in 1913.  Ron Paul’s proposal to audit the Federal Reserve, which had previously been co-sponsored by 320 members of the U.S. House of Representatives, ultimately failed by a vote of 229-198.

But shouldn’t the American people be able to see what is going on inside the Federal Reserve?

Shouldn’t we have some way to keep them accountable?

After all, they have an incredible amount of power over us, shouldn’t we have at least a little bit of power over them?

Unfortunately, the truth is that they desperately do not want light to be shined on the elaborate “shell game” that they are running.

Have you ever wondered if it was just a coincidence that the personal income tax was implemented just about the same time that the Federal Reserve was created?

Why does the U.S. government have to tax us?

Why can’t the U.S. government just print up all the money that it needs?

Well, the way that our Congress spends money that would probably create horrific hyperinflation, but that is the subject for another article.

The point is that the U.S. government should not have to get U.S. dollars from someone else.

If you take a few minutes to stop and think about it, an America where there is no Federal Reserve, no personal income tax and no IRS is not that hard to imagine.

If the U.S. government functioned just fine without all of them at one time, then why couldn’t the U.S. government function just fine without all of them now?

The system we have now clearly is not working.  The Federal Reserve was supposed to guarantee that our financial system would be perfectly stable, but in reality our financial system has become much more unstable.

It is time for different thinking.  It is time for the U.S. government to take back control of our currency and of our economy.  It is time to start electing some people with common sense to represent us in Washington.

So what do you think of the Federal Reserve?  Feel free to leave a comment with your opinion….

Look What Surprises They Snuck Into The Financial Reform Bill

Even just a decade ago, major pieces of legislation in the U.S. Congress would be just a few dozen pages long.  But today, it seems like every time Congress passes an important bill it ends up being over a thousand pages long.  In fact, the final version of the new financial reform law was over 2,300 pages.  Overall, as we wrote about extensively in a previous article, this much-ballyhooed new law does a whole lot of nothing, but it turns out that lobbyists and special interests were able to insert a few nasty surprises that we are just now finding out about.  But it was the same thing with the health care reform law.  It was only after it was passed that most of us learned that it contained a provision that will force U.S. small businesses to collectively produce millions more 1099 tax forms each year.  Now small businesses from coast to coast are screaming bloody murder about that provision but it is too late – the law has already passed.  Unfortunately, there are some surprises in the recently passed financial reform law that are nearly just as bad.

So just what are those surprises?

Well, first let’s talk about what the financial reform law does not do.  The financial reform bill was supposed to “fix” Wall Street and the financial system, but it did not do much of anything….        

-It does nothing to address the problems with Fannie Mae and Freddie Mac.

-It does not eliminate “too big to fail”.

-It does absolutely nothing to eliminate the horrific bubble in the derivatives market.

-It does nothing to reform the organization most responsible for the recent financial crisis – the Federal Reserve.  In fact, this new law actually gives the Federal Reserve even more power.

But it does create a ton of new paperwork and a bunch of new government organizations.

Oh goody!

But was there any major law that Congress has passed over the last several years that did not increase the size and scope of government?

That is a good question.

In any event, let’s get to some of the nasty surprises contained in the new financial reform law….

*Barack Obama has been running around touting how this new law will “increase transparency” in the financial world, but it turns out that a little-noticed provision of the new law exempts the Securities and Exchange Commission from virtually all requests for information by the public, including those filed under the Freedom of Information Act.

Not that the SEC was doing much good anyway.

But now the SEC’s incompetence and the nefarious actions of those they are investigating will be hidden from public view.

So what makes the SEC so special that they get to block the public from seeing their records while other government agencies still have to comply with FOIA?

Talk about ridiculous.

But there is actually another little surprise contained in the new law that is even more nasty….

*Another little-noticed section deeply embedded in the financial reform law actually gives the federal government the authority to terminate government contracts with any “financial firm” that fails to ensure the “fair inclusion” of women and minorities in its workforce.

This section of the law, written by U.S. Representative Maxine Waters, is 1,261 words long and it establishes “Offices of Minority and Women Inclusion” in the Treasury Department, the Federal Reserve, the Securities and Exchange Commission and more than a dozen other finance-related agencies.

The directors of these new departments are tasked with developing standards that “ensure, to the maximum extent possible, the fair inclusion and utilization of minorities, women, and minority-owned and women-owned businesses in all business and activities of the agency at all levels, including in procurement, insurance, and all types of contracts.”

The maximum extent possible?

That sounds pretty strong.

 So what kind of firms does this section apply to?

Well, according to Politico, this section is going to apply to just about anyone who has anything to do with the financial industry….

This applies to “services of any kind,” including investment firms, mortgage banking firms, asset management firms, brokers, dealers, underwriters, accountants, consultants and law firms, the legislation states. Every contractor and subcontractor must now certify that their workforces reflect a “fair inclusion” of women and minorities.

The truth is that this small section of the law represents a fundamental change in employment law in the United States.

And it is written so vaguely that firms are going to be tempted to go above and beyond in complying with it just so they are safe.  In fact, many analysts are already saying that it could lead to an unofficial quota system.

In any event, hundreds of new federal government bureaucrats will be watching to make certain that these vague new regulations are fully implemented.

*It also looks like the new financial reform law is going to end the era of free checking accounts.

Why?

Well, it turns out that the new law really limits the amount of fees that banks can charge and the way that they charge them.

So banks have got to make their money somewhere.  Wells Fargo and Bank of America have already announced new fees on checking accounts, and other banks are expected to follow their lead shortly.

What a mess.

Can’t Congress do anything right these days?

At this point Congress is so incompetent that if they would just sit there and do nothing that would be a vast improvement.

But that isn’t going to happen.

So what do you all think about this new financial reform law?  Feel free to leave a comment with your opinion below….

It’s A Great Time To Be A New College Graduate: High Unemployment, Crappy Service Jobs And Crippling Student Loan Debt

Today, America’s best and brightest are graduating from college full of hopes and dreams, but cold, hard economic reality is rapidly crushing many of them.  Record numbers of college graduates cannot find jobs.  Hordes of others have been forced to take very low paying service jobs.  At the same time, student loan debt loads have become more crushing than ever.  The truth is that it is a really, really bad time to be a fresh college graduate.  After spending tens of thousands of dollars and investing four (or more) years of their lives in an education, millions of recent college graduates find themselves waiting tables, tending bar, delivering pizzas and working next to (or subordinate to) people who never even went to college.  At one time, a college degree was an automatic ticket to the middle class, but now for many Americans all a college degree means is crushing loan payments, sleepless nights and mind-numbing frustration.   

We were always told that a college degree was supposed to prepare us for life in the real world.  But today, the vast majority of college graduates end up moving back in with their parents.

In fact, a recent survey of last year’s college graduates found that 80 percent moved right back home with their parents after graduation.  That was up substantially from 63 percent in 2006.

So why are 80 percent of our college graduates moving back in with their parents?

Well, because they can’t get jobs.

Two million recent college graduates are unemployed, and millions of others are working in fast food joints, at big box stores and in other very low paying service positions.

The stories that some recent college grads tell are so bizarre that they border on the unbelievable.

The Huffington Post recently featured the story of Kyle Daley – a highly qualified UCLA graduate who has been unemployed for 19 months….

I spent my time at UCLA preparing for the outside world. I had internships in congressional offices, political action committees, non-profits and even as a personal intern to a successful venture capitalist. These weren’t the run-of-the-mill office internships; I worked in marketing, press relations, research and analysis. Additionally, the mayor and city council of my hometown appointed me to serve on two citywide governing bodies, the planning commission and the open government commission. I used to think that given my experience, finding work after graduation would be easy.

At this point, however, looking for a job is my job. I recently counted the number of job applications I have sent out over the past year — it amounts to several hundred. I have tried to find part-time work at local stores or restaurants, only to be turned away. Apparently, having a college degree implies that I might bail out quickly when a better opportunity comes along.

The sad thing is that so many of these recent college graduates can’t even get hired for retail jobs.  A reader of my column on The American Dream blog named Kate is a recent college graduate who is experiencing the kind of extreme frustration that so many new graduates are going through right now….

I just graduated college in May… Moved to a new state and am now living with my boyfriend who should not and cannot continue to have to pay everything because i just plain can’t get a job.

I’m over qualified for retail survivor jobs… so I lie on my application. But then retail stores just plain don’t hire full time. So even if I could get a job as a cashier someplace… I’d only work enough hours to maybe pay for my car payment/ car insurance/ gas…. and my half of rent/electric and such is out of the question… not to mention charged to the limit credit cards from being unemployed and student loans that will hit in just a matter of months.

Any other jobs either don’t exist or they just ALL want 5 years professional experience…. which is impossible for someone who just graduated and has been working part time retail jobs since high school.

But it just isn’t college graduates that are suffering.  The truth is that this economic downturn has been hurting everyone….

*According to a recent Pew Research poll, approximately 37% of all Americans between the ages of 18 and 29 have either been unemployed or underemployed at some point during the recession.

*A different Pew Research survey found that 55 percent of American workers have experienced either unemployment, a pay decrease, a reduction in hours or an involuntary move to part-time work since the recession began.

*According to another survey, 28% of all U.S. households have at least one member that is currently looking for a full-time job.

For many U.S. households, the person looking for a job is a recent college graduate.

As you read this, hordes of highly qualified college grads are out applying for jobs as waitresses, pizza delivery men, grocery checkout clerks and hamburger flippers.

Even those who are able to get decent jobs are finding themselves disappointed.  Starting salaries for college graduates across the United States are down in 2010.

But why shouldn’t starting salaries be down?  It is the employers that hold all the leverage – not the new graduates.

Meanwhile, many of these college graduates are graduating with crushing student debt loads.  Today, many students borrow 10, 20 or even 30 thousands dollars per year while they are in school.

Federal statistics reveal that only 36 percent of the full-time students who began college in 2001 received a bachelor’s degree within four years.

That is a very sad statistic.

The truth is that college courses have become so “dumbed down” in 2010 that even the family dog should be able to graduate from most U.S. colleges in four years.

Even after 6 years, that same group’s graduation rate was still only 57 percent.

Very sad.

But getting back to the point, every single one of those years most college students are racking up huge amounts of debt.

Today, approximately two-thirds of all U.S. college students graduate with student loans

Student loan balances of over $50,000 are becoming quite common among our college grads.  In fact, some students end up with over $100,000 in student loan debt by the time they are done.

Unfortunately, student loan debt is some of the cruelest debt out there.

Federal bankruptcy law makes it nearly impossible to discharge student loan debts, and many recent grads end up with loan payments that absolutely devastate them financially at a time when they are struggling to get on their feet and make something of themselves.

So what do you think?  Can you identify with this article?  Are you a recent college graduate or do you have a recent college graduate living back at home?  If so, please feel free to share your story in the comments section below….

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