Federal Reserve

Debt-Free United States Notes Were Once Issued Under JFK And The U.S. Government Still Has The Power To Issue Debt-Free Money

Most Americans have no idea that the U.S. government once issued debt-free money directly into circulation.  America once thrived under a debt-free monetary system, and we can do it again.  The truth is that the United States is a sovereign nation and it does not need to borrow money from anyone.  Back in the days of JFK, Federal Reserve Notes were not the only currency in circulation.  Under JFK (at at various other times), a limited number of debt-free United States Notes were issued by the U.S. Treasury and spent by the U.S. government without any new debt being created.  In fact, each bill said “United States Note” right at the top.  Unfortunately, United States Notes are not being issued today.  If you stop right now and pull a dollar out of your wallet, what does it say right at the top?  It says “Federal Reserve Note”.  Normally, the way our current system works is that whenever more Federal Reserve Notes are created more debt is also created.  This debt-based monetary system is systematically destroying the wealth of this nation.  But it does not have to be this way.  The truth is that the U.S. government still has the power under the U.S. Constitution to issue debt-free money, and we need to educate the American people about this.

Posted below are pictures of the front and the back of a United States Note printed in 1963 while JFK was president….

Notice that there is a red seal instead of a green seal on the front, and it says “United States Note” rather than “Federal Reserve Note”.

According to Wikipedia, United States Notes were issued directly into circulation by the U.S. Treasury and they were first used during the Civil War….

They were originally issued directly into circulation by the U.S. Treasury to pay expenses incurred by the Union during the American Civil War. Over the next century, the legislation governing these notes was modified many times and numerous versions have been issued by the Treasury.

So why are we using debt-based Federal Reserve Notes today instead of debt-free United States Notes?

It seems rather stupid, doesn’t it?

Well, that is what Thomas Edison thought too.

Thomas Edison was once quoted in the New York Times as saying the following….

That is to say, under the old way any time we wish to add to the national wealth we are compelled to add to the national debt.

Now, that is what Henry Ford wants to prevent. He thinks it is stupid, and so do I, that for the loan of $30,000,000 of their own money the people of the United States should be compelled to pay $66,000,000 — that is what it amounts to, with interest. People who will not turn a shovelful of dirt nor contribute a pound of material will collect more money from the United States than will the people who supply the material and do the work. That is the terrible thing about interest. In all our great bond issues the interest is always greater than the principal. All of the great public works cost more than twice the actual cost, on that account. Under the present system of doing business we simply add 120 to 150 per cent, to the stated cost.

But here is the point: If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good.

Our current debt-based monetary system was devised by greedy bankers that wanted to make huge profits by creating money out of thin air and lending it to the U.S. government at interest.

Sadly, the vast majority of the American people have no idea how money is actually created in this nation.

In a previous article about money and debt, I explained how more government debt is created whenever the U.S. government puts more money into circulation….

When the government wants more money, the U.S. government swaps U.S. Treasury bonds for “Federal Reserve notes”, thus creating more government debt.  Usually the money isn’t even printed up – most of the time it is just electronically credited to the government.  The Federal Reserve creates these “Federal Reserve notes” out of thin air.  These Federal Reserve notes are backed by nothing and have no intrinsic value of their own.

When each new Federal Reserve Note is created, the interest owed by the federal government on that new Federal Reserve Note is not also created at the same time.

So the amount of government debt that is created actually exceeds the amount of money that is created.

Isn’t that a stupid system?

The U.S. Constitution says that the federal government is the one that should actually be issuing our money.

In particular, according to Article I, Section 8 of the U.S. Constitution, it is the U.S. Congress that has been given the responsibility to “coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures”.

So why is a private central banking cartel issuing our money?

As is the case with so many other issues, we desperately need to get back to the way the U.S. Constitution says that we should be doing things.

The debt-based Federal Reserve system is literally stealing the future from our children and our grandchildren.

Back in 1910, a couple years prior to the passage of the Federal Reserve Act, the national debt was only about $2.6 billion.

A little over 100 years later, our national debt is now more than 5000 times larger.

So why don’t we just admit that this system simply does not work?

Our current debt-based monetary system also requires very high personal income taxes to pay for it.

In fact, it is no accident that the personal income tax was introduced at about the same time that the Federal Reserve system originally came into existence.

Our children, our grandchildren and many generations after that are facing a lifetime of debt slavery because of us.

As I have written about previously, if the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 440,000 years to pay off the national debt.

Neither the Republicans or the Democrats are proposing any solutions to this problem.  Rather, both parties are only trying to slow down the rate at which we are going into even more debt.

But the truth is that the federal government does not have to go into a single penny of additional debt.

How could this be?

It is not too complicated.

If Congress took back the power over our currency and started issuing debt-free money a lot of our problems could be fixed.

A basic plan would look something like this….

#1) The U.S. Congress votes to take back all of the functions that it has delegated to the Federal Reserve and begins to issue debt-free United States Notes.  These United States Notes would have the exact same value as existing Federal Reserve Notes, and over time all existing Federal Reserve Notes would be taken out of circulation.

#2) The U.S. Congress nationalizes all debt held by the Federal Reserve.  That would instantly reduce the national debt by 1.6 trillion dollars.  In fact, there are a few members of Congress that have already proposed this.

#3) A Constitutional amendment is passed limiting future U.S. government deficits to a reasonable percentage of GDP.  Any future deficits would not be funded by borrowing.  Rather, future deficits would be funded by newly created United States Notes.  Therefore, the federal government would never again accumulate another penny of debt.

And it would be important to inject new money into the economy from time to time.  When existing money is destroyed or when the population grows it is important to inject a certain amount of new money into the system in order to avoid deflation.

#4) The existing national debt would be very slowly paid off with newly created United States Notes.  The U.S. government spent over 454 billion dollars on interest on the national debt during fiscal year 2011, and over time this expense would go to zero.

If the national debt is paid off slowly enough, it would not create too much inflation.  I believe that it could be paid off gradually over 50 years without shocking the economy too much.

There are some that would object to any measure that would ever cause a small amount of inflation, but my contention is that we have created a $15 trillion dollar debt mess for future generations, and it would be absolutely criminal to pass that legacy on to them.

We created this mess, and it is our responsibility to clean it up.

While there is certainly a danger that we would have a limited amount of inflation under a debt-free monetary system such as the one described above, the reality is that we are absolutely guaranteed inflation under the Federal Reserve system.

Most Americans believe that inflation is a fact of life, but the sad truth is that the United States has only had a major, ongoing problem with inflation since the Federal Reserve was created back in 1913.

If you do not believe this, just check out this chart.

Sadly, the U.S. dollar has lost well over 95 percent of its value since the Federal Reserve was created.

So, yes, there would be a need for strict monetary discipline under a debt-free monetary system, but it would be hard to do worse than the Federal Reserve has already been doing.

And Congress could always slow down inflation using other methods.  For example, raising the reserve requirements for banks (which should be done anyway) would help keep inflation in check.

If the above proposals were adopted, the end result would be something that we could all live with.  The Federal Reserve system would be abolished, the national debt burden on future generations would be wiped out, the economy would not have to go through a devastating economic collapse that could last a decade or longer, and we could eventually make a fairly smooth transition to “hard money” if we wanted to after the national debt is gone.

Is there any other proposal out there that does all of those things?

There are many out there that would dispute some of the points above, and debate is good.  By engaging in debate, we can hopefully help educate the American people about the nature of money.

The key is to get rid of our current debt-based Federal Reserve Notes and replace them with debt-free United States Notes.

The American people need to understand that it is a lie that the U.S. government “must” borrow money from somebody else.

When the U.S. government borrows money, it slowly transfers wealth from the American people to those that lent it.

At this point, we have created a financial nightmare for future generations that is unlike anything the world has ever seen before.  We owe it to future generations to eliminate the debt problem without destroying the United States economy.  Adopting debt-free money would allow us to do that.

But sadly, neither political party is even talking about debt-free money.  In fact, most of the politicians in both political parties probably do not even know what debt-free money is.

So we need to get the American people educated about these things.  Because if we stay on the course that we are currently on, an economic collapse is inevitable.

Have You Heard About The 16 Trillion Dollar Bailout The Federal Reserve Handed To The Too Big To Fail Banks?

What you are about to read should absolutely astound you.  During the last financial crisis, the Federal Reserve secretly conducted the biggest bailout in the history of the world, and the Fed fought in court for several years to keep it a secret.  Do you remember the TARP bailout?  The American people were absolutely outraged that the federal government spent 700 billion dollars bailing out the “too big to fail” banks.  Well, that bailout was pocket change compared to what the Federal Reserve did.  As you will see documented below, the Federal Reserve actually handed more than 16 trillion dollars in nearly interest-free money to the “too big to fail” banks between 2007 and 2010.  So have you heard about this on the nightly news?  Probably not.  Lately Bloomberg has been reporting on some of this, but even they are not giving people the whole picture.  The American people need to be told about this 16 trillion dollar bailout, because it is a perfect example of why the Federal Reserve needs to be shut down.  The Federal Reserve has been actively picking “winners” and “losers” in the financial system, and it turns out that the “friends” of the Fed always get bailed out and always end up among the “winners”.  This is not how a free market system is supposed to work.

According to the limited GAO audit of the Federal Reserve that was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the grand total of all the secret bailouts conducted by the Federal Reserve during the last financial crisis comes to a whopping $16.1 trillion.

That is an astonishing amount of money.

Keep in mind that the GDP of the United States for the entire year of 2010 was only 14.58 trillion dollars.

The total U.S. national debt is only a bit above 15 trillion dollars right now.

So 16 trillion dollars is an almost inconceivable amount of money.

But some other dollar figures have been thrown around lately regarding these secret Federal Reserve bailouts.  Let’s take a look at them and see what they mean.

$1.2 Trillion

A recent Bloomberg article made the following statement….

The $1.2 trillion peak on Dec. 5, 2008 — the combined outstanding balance under the seven programs tallied by Bloomberg — was almost three times the size of the U.S. federal budget deficit that year and more than the total earnings of all federally insured banks in the U.S. for the decade through 2010, according to data compiled by Bloomberg.

The $1.2 trillion figure represents the peak outstanding balance on these loans, not the total amount of all the loans.  On December 5, 2008 the “too big to fail” banks owed this much money to the Federal Reserve.  Many of them could not pay these short-term loans back right away and had to keep rolling them over time after time.  Each time a short-term loan got rolled over that represented a new loan.

$7.7 Trillion

Bloomberg is reporting that the Federal Reserve had made a total of $7.77 trillion in financial commitments to the big banks by the end of March 2009….

Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.

But as mentioned above, a one-time limited GAO audit of the Federal Reserve that was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act covered an even broader time period and revealed even more bailout loans.

According to the GAO audit, $16.1 trillion in secret loans were made by the Federal Reserve between December 1, 2007 and July 21, 2010.  The following list of firms and the amount of money that they received was taken directly from page 131 of the GAO audit report….

Citigroup – $2.513 trillion
Morgan Stanley – $2.041 trillion
Merrill Lynch – $1.949 trillion
Bank of America – $1.344 trillion
Barclays PLC – $868 billion
Bear Sterns – $853 billion
Goldman Sachs – $814 billion
Royal Bank of Scotland – $541 billion
JP Morgan Chase – $391 billion
Deutsche Bank – $354 billion
UBS – $287 billion
Credit Suisse – $262 billion
Lehman Brothers – $183 billion
Bank of Scotland – $181 billion
BNP Paribas – $175 billion
Wells Fargo – $159 billion
Dexia – $159 billion
Wachovia – $142 billion
Dresdner Bank – $135 billion
Societe Generale – $124 billion
“All Other Borrowers” – $2.639 trillion

This report was made available to all the members of Congress, but most of them have been totally silent about it.  One of the only members of Congress that has said something has been U.S. Senator Bernie Sanders.

The following is an excerpt from a statement about this audit that was taken from the official website of Senator Sanders….

“As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world”

So where is everyone else?

Why aren’t leading Republicans and leading Democrats crying bloody murder over this report?

This scandal should have been front page news for months when it was revealed.

But it wasn’t.

And Guess what?

Not only did the Federal Reserve give 16.1 trillion dollars in nearly interest-free loans to the “too big to fail” banks, the Fed also paid them over 600 million dollars to help run the emergency lending program.  According to the GAO, the Federal Reserve shelled out an astounding $659.4 million in “fees” to the very financial institutions which caused the financial crisis in the first place.

In addition, it turns out that trillions of dollars of this bailout money actually went overseas.  According to the GAO audit, approximately $3.08 trillion went to foreign banks in Europe and in Asia.

So why were our dollars being used to bail out foreign banks while tens of millions of American families were deeply suffering?

That is a very good question.

Also, it is important to remember that many of these bailout loans were made at below market interest rates, and this enabled many of these financial institutions to rake in huge profits.

According to a recent Bloomberg article, the big banks brought in an estimated $13 billion by taking advantage of the Fed’s below-market rates….

While the Fed’s last-resort lending programs generally charge above-market interest rates to deter routine borrowing, that practice sometimes flipped during the crisis. On Oct. 20, 2008, for example, the central bank agreed to make $113.3 billion of 28-day loans through its Term Auction Facility at a rate of 1.1 percent, according to a press release at the time.

The rate was less than a third of the 3.8 percent that banks were charging each other to make one-month loans on that day. Bank of America and Wachovia Corp. each got $15 billion of the 1.1 percent TAF loans, followed by Royal Bank of Scotland’s RBS Citizens NA unit with $10 billion, Fed data show.

So once the financial crisis was over, were adjustments made to the financial system to make sure that this type of thing would never happen again?

Of course not.

Today, the “too big to fail” banks are larger than ever.  The total assets of the six largest U.S. banks increased by 39 percent between September 30, 2006 and September 30, 2011.

So now they are more “too big to fail” than ever.

But this is what happens when we allow unelected central bank bureaucrats to run our financial system.

Most Americans do not realize this, but the truth is that the Federal Reserve is not part of the government.  In fact, it is about as “federal” as Federal Express is.  The Federal Reserve has admitted that they are a privately owned institution in court many times, and you can see video of a Federal Reserve employee admitting that the Federal Reserve is privately owned right here.

The Federal Reserve is an out of control monster that is throwing around trillions of dollars whenever it wants to.  Nobody should be allowed to do this.  Nobody should be allowed to give bailouts to banks and corporations without the express permission of the U.S. Congress and the president of the United States.

This is a point that I made in my article yesterday.  The Federal Reserve decided this week that it is going to provide “liquidity support” to Europe.  If the American people do not like this move, that is just too bad.  We do not get a say in the matter.

Are you starting to understand why I keep pushing the idea that it is time to shut down the Federal Reserve?

Please share this information about the secret 16 trillion dollar Federal Reserve bailout with your family and your friends.

If we can get enough people to wake up, perhaps there is still time to change the direction that this country is headed.

What Have The Central Banks Of The World Done Now?

The central banks of the world are acting as if it is 2008 all over again.  Desperate times call for desperate measures, and right now the central bankers are pulling out all the stops.  The Federal Reserve, the European Central Bank, the Bank of England, the Bank of Canada, the Bank of Japan and the Swiss National Bank have announced a coordinated plan to provide liquidity support to the global financial system.  According to the plan, the Federal Reserve is going to substantially reduce the interest rate that it charges the European Central Bank to borrow dollars.  In turn, that will enable the ECB to lend dollars to European banks at a much cheaper rate.  The hope is that this will alleviate the credit crunch which has gripped the European financial system by the throat.  So where is the Federal Reserve going to get all of these dollars that it will be loaning out at very low interest rates?  You guessed it – the Fed is just going to create them out of thin air.  Our currency is being debased so that Europe can be helped out.  Unfortunately, the impact of this move will be mostly “psychological” because it really does nothing to address the fundamental problems that Europe is facing.  It is up to Europe to solve those problems, and so far Europe has shown no signs of being able to do that.

The major central banks of the world say that they want to “enhance their capacity to provide liquidity support to the global financial system.”  But essentially what is happening is that the Federal Reserve is going to be zapping large amounts of dollars into existence and loaning them out to the ECB very, very cheaply.  Think of it as a type of “quantitative easing” on a global scale.

The decision to do this was reportedly made by the Federal Reserve on Monday morning.  For the moment, this move seems to have stabilized the European financial system.  It is quite unlikely that any major European banks will fail this weekend now.

But as mentioned above, this move does nothing to solve the very serious financial problems that Europe is facing.  This intervention by the central banks is merely just a speed bump on the road to financial oblivion.

Most Americans are not going to understand what the central banks of the world just did, but it really is not that complicated.

The following is how CNN chief business correspondent Ali Velshi broke down what the central banks have done….

In an attempt to stave off the consequences of a global credit freeze, the Federal Reserve, in coordination with major central banks, has created a credit line available to those central banks, whereby they can borrow dollars at reduced interest rates for periods of three months. The central banks, in turn, can lend to commercial banks in their respective countries. This is meant to reduce the cost of short-term borrowing for troubled European banks and to give them immediate access to dollars.

This was done immediately after the collapse of Lehman Brothers as well, to alleviate the consequences of banks being largely unwilling to lend to other banks, even for short periods, for fear that the borrowing banks could fail.

Okay – so the Federal Reserve is loaning giant piles of cheap money to the European Central Bank.

So where in the world does all of that money come from?

As a CNBC article recently explained, all of this money is created right out of thin air by the Federal Reserve….

Neither the dollars nor the Euros come from anywhere. They aren’t moved or debited from anywhere. They are invented right on the spot with a few taps on the key pad. And that’s all. There’s no printing press fired up to make new dollars or euros.

This is sometimes called “fiat money.” But that makes it sound as if some command from a sovereign created the money. It’s really closer to “keyboard money,” since it is created by data entry in a computer.

Does that sound bizarre to you?

It should.

But that is how the global financial system really works.

We live in a crazy world.

So what did the financial markets of the world think of this move by the Federal Reserve?

It turns out that they absolutely loved it.

The Dow was up 490 points, and that was the biggest gain of the year so far.

Unfortunately, this stock market rally is not going to last indefinitely.  If you are still in the market, enjoy this while you can because eventually a whole lot of pain is going to be coming.

Again, nothing has been solved.  Europe is still in a massive amount of trouble.  But the announcement did make everyone feel all “warm and fuzzy” for at least a day.

Michelle Girard, a senior economist at RBS Securities, said the following about this move….

“The impact is more psychological than anything else”

Just think of it as “comfort food” for the financial markets.

It was also a very desperate move.

In fact, some even believe that this move happened because a major European bank was in danger of failing.

Just check out some of the things that Jim Cramer of CNBC has been saying on Twitter….

If the Fed didn’t act we would have had the largest bank failure ever this weekend, i believe.

The actions the governments took today shows that there was without a doubt a major bank about to fall this weekend.  That’s very dire….

I believe a major European bank would have gone under this weekend…. That’s why they did this….

An article in Forbes has also speculated that this move was made because a major European bank was in imminent danger of failing….

Did a big European bank come close to failing last night?  European banks, especially French banks, rely heavily on funding in the wholesale money markets.  Given the actions of the world’s largest central banks last night, it raises the question of whether a major bank was having difficulty funding its immediate liquidity needs.

Perhaps we will never know the truth, but the reality is that the Federal Reserve and the European Central Bank would have never taken coordinated action like this if they did not believe that there was some sort of imminent threat to the global financial system.

Sadly, this latest move is also going to have some side effects.

Pimco senior vice president Tony Crescenzi says that all of this “liquidity” is going to dramatically increase the size of the U.S. monetary base….

Keep in mind that any use of the Fed’s swap facility expands the Fed’s monetary base: all dollars, no matter where they are deposited, whether it be Kazakhstan, Japan, or Mexico, wind up back in an American bank. This means that any time a foreign central bank engages in a swap with the Federal Reserve, the Fed will create new money in order to make the swap. Use of the Fed’s liquidity swap line in late 2008 was the main cause of a surge in the Fed’s monetary base at that time. The peak for the swap line was about $600 billion in December 2008. Some observers will therefore say that the swap line is a backdoor way to engage in more quantitative easing.

When there is more money floating around out there but the same amount of goods and services, prices go up.

So will we eventually see more inflation in the United States because of all this?

That is what some are fearing.

Meanwhile, politicians in Europe have failed to come up with a plan to address the European financial crisis once again.

They are calling it a “delay”, but the truth is that it should be called a “failure”.  The following comes from an article in USA Today….

The ministers delayed action on major financial issues — such as the concept of a closer fiscal union that would guarantee more budgetary discipline — until the heads of state meet next week in Brussels.

So will European politicians come up with a real plan next week in Brussels?

That seems unlikely.

The reality is that this latest move by the major central banks of the world does not change the fact that Europe is in a huge amount of trouble and is most likely headed for a very painful financial collapse.

One more thing that this latest move by the central banks of the world highlights is the fact that we do not have any control over what they do.

All of these central banks are run by unelected bureaucrats that answer to nobody.  The decisions that these central bankers make affect all of our lives in a very significant way, and yet we have zero input into these decisions.

Most of the decisions that these central bankers make seem to benefit big banks and big financial institutions.  They always claim that the benefits will “filter down” to the rest of us.  But most of the time what ends up filtering down to us is the economic pain that comes from their bad decisions.

As I have written about so many times before, these central banks need to be abolished.  The American people need to tell Congress to shut down the Federal Reserve and to start issuing debt-free United States currency.

We do not want a bunch of unelected central bankers to “centrally plan” the U.S. economy or to “centrally plan” the global economy.

The more these central bankers monkey with things, the more they mess things up.

Yes, this latest move has stabilized things for the moment, but big trouble is on the horizon for the global financial system.

Count on it.

Bernanke Says That Any Criticism Of The Federal Reserve Is Based On “Misconceptions”

Federal Reserve Chairman Ben Bernanke is taking his show on the road in at attempt to help Americans feel better about the Federal Reserve.  During a visit to the Fort Bliss headquarters of the Army’s 1st Armored Division this week, Bernanke held a town hall meeting during which he took questions from some of the soldiers.  Bernanke tried to sound as compassionate as possible as he assured the soldiers that the Federal Reserve is looking out for the American people and is doing everything that it can to help create jobs.  At one point, Bernanke even made the following statement: “For a lot of people, I know, it doesn’t feel like the recession ever ended.”  That probably helped a lot of people feel better.  A few probably even had a good cry.  But what Bernanke did not explain to the troops is that the Federal Reserve is very much responsible for the fact that unemployment is rampant, for the fact that the U.S. dollar is rapidly being devalued and for the fact that we have accumulated the largest national debt in the history of the world.

Ben Bernanke keeps insisting that the Federal Reserve has two main jobs (fighting inflation and keeping unemployment low) and that it is working incredibly hard to accomplish that dual mandate.  During his visit with the soldiers he told them that the Fed is very determined to create more jobs for the American people….

“We at the Federal Reserve have been focusing intently on supporting job creation.”

Well, if we are to judge the Federal Reserve by how well it has accomplished its “dual mandate”, then the Federal Reserve has been an abysmal failure.

Since the Federal Reserve was created, the U.S. dollar has lost well over 95 percent of its value to inflation.

Is that something Bernanke should be proud of?

Of course not.

Okay, so the Fed has failed when it comes to keeping inflation under control.

What about jobs?

Well, the first decade of this century was the worst decade for job creation that the United States has seen since the Great Depression.

The sad truth is that a total of zero jobs were created last decade.  The following is a quote from a recent article in Washington Monthly….

“If any single number captures the state of the American economy over the last decade, it is zero. That was the net gain in jobs between 1999 and 2009—nada, nil, zip. By painful contrast, from the 1940s through the 1990s, recessions came and went, but no decade ended without at least a 20 percent increase in the number of jobs.”

So what kind of a grade should we give the Federal Reserve for the job that it has done?

How about a big fat F?

The Federal Reserve has been a failure of epic proportions.  It greatly contributed to the Great Depression (even Bernanke admits this), it created the conditions for the financial bubbles that greatly contributed to the financial crisis of 2008, and it has brought us to the verge of yet another gigantic financial crisis.

But Ben Bernanke believes that all of us that are criticizing the Fed are just ignorant.  He thinks that we just don’t understand the Fed properly.  During a recent question and answer session, Bernanke stated the following….

“I think that the concerns about the Fed are based on misconceptions”

Oh, if only the rest of us understood how the Fed works and how they really care about the American people.  Then everything would be okay.

Not.

During that same session, Bernanke insisted that the Federal Reserve only has the purest motives….

“Our motives are strictly to do what is in the best interest of the broad public and I believe that our efforts to stabilize the financial system, which were ultimately proved successful, were very much in the interest of the broad public”

According to Bernanke, those that work at the Fed are unselfish guardians of our monetary system who are fighting for truth, justice and the American way of life.

Okay, perhaps I am exaggerating just a bit, but you get the point.

Bernanke is trying very hard to convince all of us that the Federal Reserve is just misunderstood and that we should just trust what the “experts” are doing.

So what will the plan be if the financial crisis in Europe blows up?

Well, during his visit to Fort Bliss one of the soldiers actually asked him about that.  The following is his answer….

“Although the Fed would obviously do all that we could to maintain stability and to keep monetary policy as easy as necessary to try to minimize the damage, I don’t think we would be able to escape the consequences of a blow-up in Europe”

Oh, he would keep monetary policy “as easy as necessary”.

Isn’t that lovely – I bet that will be great for the value of the U.S. dollar.

Bernanke also told the soldiers that he believes that happy days are ahead for the U.S. economy….

“I do believe we will return to a healthier growth rate. I don’t see any reason why we couldn’t”

So we should just trust Bernanke, right?

He has never been wrong before, right?

Well, let’s check the record….

In 2005, Bernanke said that we shouldn’t worry because housing prices had never declined on a nationwide basis before and he said that he believed that the U.S. would continue to experience close to “full employment”….

“We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.”

In 2005, Bernanke also said that he believed that derivatives were perfectly safe and posed no danger to financial markets….

“With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly.”

In 2006, Bernanke said that housing prices would probably keep rising….

“Housing markets are cooling a bit. Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise.”

In 2007, Bernanke insisted that there was not a problem with subprime mortgages….

“At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency.”

In 2008, Bernanke said that a recession was not coming….

“The Federal Reserve is not currently forecasting a recession.”

A few months before Fannie Mae and Freddie Mac collapsed, Bernanke insisted that they were totally secure….

“The GSEs are adequately capitalized. They are in no danger of failing.”

For many more examples that demonstrate the absolutely nightmarish track record of Federal Reserve Chairman Ben Bernanke, please see the following articles….

*”Say What? 30 Ben Bernanke Quotes That Are So Stupid That You Won’t Know Whether To Laugh Or Cry”

*”Is Ben Bernanke A Liar, A Lunatic Or Is He Just Completely And Totally Incompetent?”

But after being wrong over and over and over, Barack Obama still nominated Ben Bernanke for another term as Chairman of the Fed.

It is hard to put how stupid that was into words.

Look, if someone wrecked your car again and again would you keep handing that person your keys?

It just doesn’t make any sense.

Bernanke made another statement during his visit with the troops this week that was really bizarre….

“The Federal Reserve is not perfect … but at this point, if you look around the world, you see no alternative”

He has got to be kidding, right?

Of course there are no other alternatives for us to look at!  Only a handful of nations on earth do not have a central bank at this point.  Iran, North Korea and a handful of others don’t have a central bank dominated by the international banking community but basically everyone else does.

Just because nearly every nation on earth has a central bank does not mean that there are not alternatives to the Federal Reserve system.  I detailed a plan the other day that would transition us away from the Federal Reserve system.

It most certainly can be done.

But right now, most of our politicians are standing up for a system that allows private central bankers to spend trillions of dollars bailing out their friends while the rest of us suffer.

The other day, an article by U.S. Senator Bernie Sanders appeared in the Huffington Post that detailed what was learned during a very limited audit of transactions conducted by the Federal Reserve during the recent financial crisis.

According to Senator Sanders, the Federal Reserve made 16 trillion dollars in secret loans to big corporations, Wall Street banks, foreign nations and wealthy individuals during the financial crisis….

“…we learned that the Federal Reserve provided a jaw-dropping $16 trillion in total financial assistance to every major financial institution in the country as well as a number of corporations, wealthy individuals and central banks throughout the world.”

Senator Sanders also says that the audit revealed that many of those running the Fed are from the same institutions that the Fed has been bailing out….

“The GAO also revealed that many of the people who serve as directors of the 12 Federal Reserve Banks come from the exact same financial institutions that the Fed is in charge of regulating. Further, the GAO found that at least 18 current and former Fed board members were affiliated with banks and companies that received emergency loans from the Federal Reserve during the financial crisis.”

Wait – isn’t there a huge conflict of interest problem there?

Of course there is.

But neither major political party is making a stink about it.

Sadly, Senator Sanders says that the audit found that there was “instance after instance” where individuals used their positions at the Fed to benefit their own firms….

“The GAO has detailed instance after instance of top executives of corporations and financial institutions using their influence as Federal Reserve directors to financially benefit their firms, and, in at least one instance, themselves.”

Wow – you would think that this scandal would have been reported on the front page of every major newspaper from coast to coast.

But that didn’t happen.

In fact, both major political parties continue to insist that there is nothing wrong with the Federal Reserve and that the Fed is doing a wonderful job.

It really is sickening.

Look, we need to educate the American people about the Federal Reserve and we need to make control over our currency a major issue in the 2012 campaign.

The American people should demand that the issuing of all United States currency be immediately returned to Congress as the U.S. Constitution requires.

The American people should demand that no more debt-based Federal Reserve Notes be issued and that from now on only debt-free United States money be issued.

The Federal Reserve has a track record of nearly 100 years of failure.

It is time for it to be shut down.

The choice, America, is up to you.

14 Reasons Why We Should Nationalize The Federal Reserve

One of the most important steps that we could take to bring prosperity back to America would be to nationalize the Federal Reserve.  Doing so would allow the federal government to quit borrowing money, dramatically reduce taxes and eventually pay off the entire U.S. national debt.  Instead of inheriting the largest debt in the history of the world, future generations would actually have a chance at economic prosperity because they would not be forced to pay off the horrific debt of previous generations.  The Federal Reserve is a perpetual debt machine, it has almost completely destroyed the value of the U.S. dollar and it has an absolutely nightmarish track record of incompetence.  There are no good reasons to keep the status quo.  Our current debt-based monetary system will inevitably lead to a complete and total economic collapse.  We desperately need to make a change while we still can.  As you will see below, there are a ton of good reasons why we should nationalize the Federal Reserve.

Right now, most Americans believe that the Federal Reserve is actually an agency of the federal government.  But that is simply not the case.  The truth is that the Federal Reserve is about as “federal” as Federal Express is.

The Federal Reserve openly admits as much.  For example, in defending itself against a Bloomberg request for information under the Freedom of Information Act, the Federal Reserve stated in court that it was “not an agency” of the U.S. government and therefore not subject to the Freedom of Information Act.

So who owns the Federal Reserve?

As the Federal Reserve’s own website describes, it is the member banks that own it….

The twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation’s central banking system, are organized much like private corporations–possibly leading to some confusion about “ownership.” For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.

The debt-based monetary system established by the Federal Reserve has greatly enriched the big banks and the people that own them.  This has been at the expense of the American people.

A private central bank should not issue our currency, set interest rates and run our economy.  Rather, we need to return control over the currency to the American people where it belongs.

The following are 14 reasons why we should nationalize the Federal Reserve….

#1 The U.S. Constitution says that the federal government is the one that should be issuing our money.

In particular, according to Article I, Section 8 of the U.S. Constitution, it is the U.S. Congress that has been given the responsibility to “coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures”.

#2 Our current debt-based monetary system is a perpetual debt machine.  It is absolutely imperative that we nationalize the Federal Reserve and begin to issue debt-free money.

In a previous article about money and debt, I explained how more government debt is created whenever the U.S. government puts more money into circulation….

When the government wants more money, the U.S. government swaps U.S. Treasury bonds for “Federal Reserve notes”, thus creating more government debt.  Usually the money isn’t even printed up – most of the time it is just electronically credited to the government.  The Federal Reserve creates these “Federal Reserve notes” out of thin air.  These Federal Reserve notes are backed by nothing and have no intrinsic value of their own.

This process creates a huge problem.  When each new dollar is created, the interest owed by the federal government on that new dollar is not also created at the same time.

Therefore, more debt is actually created than the amount of money that the federal government receives from the Federal Reserve.

This is a Ponzi scheme that is designed to drain wealth from the American people and transfer it to the banking system.

This is why I call the Federal Reserve system a perpetual debt machine.  Today, the U.S. national debt is more than 5,000 times larger than it was 100 years ago.

Back in 1910, prior to the passage of the Federal Reserve Act, the national debt was only about $2.6 billion.

By going to a system of debt-free money, the U.S. government would never have to borrow a single dollar ever again.

#3 Our current debt-based monetary system requires very high personal income taxes to pay for it.  It is no accident that the personal income tax was introduced at about the same time that the Federal Reserve system came into existence.

If we nationalized the Federal Reserve and capped federal government spending at a reasonable percentage of GDP, it would be entirely possible to massively cut taxes and still keep our promises regarding Social Security and other important social programs at the same time.

I believe that eventually the entire personal income tax system could be completely wiped out and the IRS could be totally shut down.  This would save our economy billions upon billions of dollars in income tax compliance costs.

However, as an initial first step, I believe that we should eliminate all payroll taxes, all “self-employment taxes” and all taxes on the first $100,000 earned by every American.

This would provide much needed relief to the millions of poor and middle income families that have been hurt so badly by this economic downturn.

Also, I believe that we could instantly reduce the corporate tax rate to levels that would be competitive with the rest of the world, while closing corporate tax loopholes at the same time.  This would remove the temptation for companies to leave the United States in order to escape our brutally high corporate tax rates.

Yes, the proposals above would definitely cut taxes.

So where would we make up the difference?

Well, the U.S. Constitution provides one clue.  According to Article I, Section 8 of the U.S. Constitution, the U.S. Congress has the right to impose “duties, imposts and excises” on goods sold in this country.

For way too long, big corporations have been taking advantage of sweatshops in the third world.  For way too long, other nations have used predatory trade practices to take unfair advantage of us.  For way too long, we have allowed nations with horrific human rights records to ship their goods into our country for free.

Well, we need to bring that to an end.  By raising tariffs we would raise money for the federal government and we could potentially start to reverse the flow of jobs and businesses that have been leaving this country.

Access to the U.S. market is a privilege, not a right.  High tariffs would be imposed on goods from any country that allows slave labor wages to be paid.  Very high tariffs would be imposed on goods from any country that is using predatory trade practices against us.  Extremely high tariffs would be imposed on any nation that does not respect basic human rights.

However, please keep in mind that none of this would work if we did not nationalize the Federal Reserve.  The tax cuts proposed above would be suicidal under our current debt-based monetary system.  But if we nationalize the Fed, we really could do this.  It may sound crazy, but it really would work.

#4 If we nationalize the Federal Reserve, there would be no more budget deficits.  If the federal government was a bit short one year, it would just print up a little bit of extra money in order to make up the difference.

It would also be very important to cap federal government spending as a percentage of GDP so that we don’t have crazy Congress critters creating a lot of inflation by spending us into oblivion.

Just because we would be adopting a debt-free monetary system does not mean that we could throw spending discipline out the window.  Rather, it would actually become more important than ever.

#5 If we nationalize the Federal Reserve, we would instantly reduce the national debt by 1.6 trillion dollars.  That is the amount that is currently on the balance sheet of the Federal Reserve.  The Federal Reserve just created this money out of thin air anyway, so it was never their money to begin with.  Some members of Congress have already proposed cancelling the debt held by the Federal Reserve, and it is a great idea.

#6 If we nationalize the Federal Reserve, we could eventually get rid of the entire national debt.

Under our current system, the U.S. national debt will never, ever be paid off.  We are 15 trillion dollars in debt, and at this point we add more than a trillion dollars to that number every year.

As I have written about previously, if the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 440,000 years to pay off the national debt.

But under our current system we are not paying it off.  Rather we keep piling up more debt at an astounding pace.

In a system of debt-free money, there would be no more budget deficits, and we could actually start slowly paying off the national debt with newly issued “United States money”.

This would have to be done very slowly so as to not shock the financial system, but it could be done.  As U.S. debt becomes due, a small percentage of it could be retired each year.

It is entirely conceivable that within 30 to 40 years we could pay it off entirely without causing tremendous damage to the financial system.

#7 If we nationalize the Federal Reserve, we will eventually totally eliminate the interest on the national debt.  Most Americans don’t understand this, but each year we spend hundreds of billions of dollars just on interest on the national debt.  For example, the U.S. government spent over 454 billion dollars on interest on the national debt during fiscal year 2011.

Under a debt-free monetary system, that number would eventually go to zero.  That would save the federal government a ton of money.

#8 While there is certainly a danger that we would have inflation under a debt-free monetary system, the reality is that we are absolutely guaranteed inflation under the Federal Reserve system.

Most Americans believe that inflation is a fact of life, but the sad truth is that the United States has only had a major, ongoing problem with inflation since the Federal Reserve was created back in 1913.

If you do not believe this, just check out this chart.

Sadly, the U.S. dollar has lost well over 95 percent of its value since the Federal Reserve was created.

So, yes, there would be a need for monetary discipline under a debt-free monetary system, but it would be hard to do worse than the Federal Reserve has already been doing.

#9 If we nationalize the Federal Reserve, we would eliminate all of the financial bubbles that the Federal Reserve has been creating.

For example, there would not have been such a bad housing crash if the Federal Reserve had not created such perfect conditions for a housing bubble in the first place.

We should eliminate the Federal Reserve and allow the market to set interest rates.  Having a central authority that sets interest rates is just simply wrong and it creates all sorts of problems.

#10 The Federal Reserve has not been doing a good job.

In case anyone has not noticed, Federal Reserve Chairman Ben Bernanke has a very long track record of incompetence.  Nearly every major judgment that he has made since taking over that position has been dead wrong.

We are always told that we need someone to run the economy and that the Fed is there to keep depressions from happening.

Well, the truth is that the Fed actually greatly contributed to the Great Depression and it was at least partly responsible for the financial crash of 2008.

Now we are right on the verge of yet another massive financial implosion.

If someone keeps wrecking your car, you don’t let them keep driving it, do you?

#11 If we nationalize the Federal Reserve, we could potentially transition to “sound money” at some point.

There is great debate about this of course.  But it is a debate that we need to have.

But before we go to “hard money” we need to do something about this horrific debt that we have piled up for future generations first.  We simply cannot lock this debt in and expect them to pay for our mistakes.

We made this mess, so we need to clean it up.

Going to a debt-free monetary system would allow us to do that.

#12 If we nationalize the Federal Reserve, our local banks will have much more freedom.  Most Americans simply do not understand just how much power the Federal Reserve actually has over our local banks.

For example, just last year Federal Reserve officials walked into one bank in Oklahoma and demanded that they take down all the Bible verses and all the Christmas buttons that the bank had been displaying.

#13 If we nationalize the Federal Reserve, we won’t have trillions of dollars of secret loans being made to big financial institutions on Wall Street and in foreign countries.

Most Americans don’t realize this, but the Federal Reserve made $16.1 trillion in secret loans to their friends during the last financial crisis.

Meanwhile, hundreds of small banks were left out in the cold and the American people got no help.

This is rampant corruption and it needs to be stopped.

#14 The Federal Reserve needs to be nationalized because it is an unelected, unaccountable “fourth branch of government” that has gotten completely and totally out of control.  Even some members of Congress are now openly complaining about how much power the Fed has.  For example, Ron Paul told MSNBC last year that he believes that the Federal Reserve is now 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.”

To learn much more about the Federal Reserve and how it is destroying prosperity in America, there is a great animated documentary on YouTube entitled “The American Dream” that you can watch right here.

It is absolutely imperative that the American people get educated about the Federal Reserve and about why a debt-based monetary system is bad for us.

In 1922, Henry Ford wrote the following….

“The people must be helped to think naturally about money. They must be told what it is, and what makes it money, and what are the possible tricks of the present system which put nations and peoples under control of the few.”

The U.S. government does not need to go into debt to anyone.

The U.S. government is a sovereign nation.

So why in the world are we 15 trillion dollars in debt?

We have allowed ourselves to become willingly enslaved.

In the book of Proverbs, it tells us the following….

The rich ruleth over the poor, and the borrower is servant to the lender.

By allowing ourselves to become enslaved to debt, we have become the servants of the international banking system.

Our founding fathers attempted to warn us about this.

For example, Thomas Jefferson strongly believed that when the federal government borrows money in one generation which must be paid back by future generations it is equivalent to stealing….

And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.

Not only that, Thomas Jefferson also once stated that if he could add just one more amendment to the U.S. Constitution it would be a ban on all government borrowing….

I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.

If we had implemented that advice, how much better off would we be today?

We can still do this.

We can take back control of our financial system.

We can nationalize the Federal Reserve.

We can dramatically cut taxes and eventually shut down the IRS.

We can give our children and grandchildren a future that is debt free.

We can escape the tyranny of the international bankers.

The choice, America, is up to you.

The Federal Reserve Plans To Identify “Key Bloggers” And Monitor Billions Of Conversations About The Fed On Facebook, Twitter, Forums And Blogs

The Federal Reserve wants to know what you are saying about it.  In fact, the Federal Reserve has announced plans to identify “key bloggers” and to monitor “billions of conversations” about the Fed on Facebook, Twitter, forums and blogs.  This is yet another sign that the alternative media is having a dramatic impact.  As first reported on Zero Hedge, the Federal Reserve Bank of New York has issued a “Request for Proposal” to suppliers who may be interested in participating in the development of a “Sentiment Analysis And Social Media Monitoring Solution”.  In other words, the Federal Reserve wants to develop a highly sophisticated system that will gather everything that you and I say about the Federal Reserve on the Internet and that will analyze what our feelings about the Fed are.  Obviously, any “positive” feelings about the Fed would not be a problem.  What they really want to do is to gather information on everyone that views the Federal Reserve negatively.  It is unclear how they plan to use this information once they have it, but considering how many alternative media sources have been shut down lately, this is obviously a very troubling sign.

You can read this “Request for Proposal” right here.  Posted below are some of the key quotes from the document (in bold) with some of my own commentary in between the quotes….

“The intent is to establish a fair and equitable partnership with a market leader who will who gather data from various social media outlets and news sources and provide applicable reporting to FRBNY. This Request for Proposal (“RFP”) was created in an effort to support FRBNY’s Social Media Listening Platforms initiative.”

A system like this is not cheap.  Apparently the Federal Reserve Bank of New York believes that gathering all of this information is very important.  In recent years, criticism of the Federal Reserve has become very intense, and most of this criticism has been coming from the Internet.  It has gotten to the point where the Federal Reserve Bank of New York has decided that it had better listen to what is being said and find out who is saying it.

“Social media listening platforms are solutions that gather data from various social media outlets and news sources.  They monitor billions of conversations and generate text analytics based on predefined criteria.  They can also determine the sentiment of a speaker or writer with respect to some topic or document.”

The Federal Reserve Bank of New York intends to listen in on “billions of conversations” and to actually determine the “sentiment” of those that are participating in those conversations.

Of course it will be those conversations that are “negative” about the Federal Reserve that will be setting off the alarm bells.

“Identify and reach out to key bloggers and influencers”

Uh oh.  So they plan to “identify” key bloggers and influencers?

What exactly do they plan to do once they “identify” them?

“The solution must be able to gather data from the primary social media platforms –Facebook, Twitter, Blogs, Forums and YouTube.”

Hopefully you understand this already, but nothing posted on the Internet is ever anonymous.  Everything on the Internet is gathered by a vast host of organizations and is used for a wide variety of purposes.  Data mining has become a billion dollar industry, and it is only going to keep growing.

You may think that you are “anonymous” when you criticize organizations like the Fed, but the truth is that if you are loud enough they will see it and they will make a record of it.

“The solution must provide real-time monitoring of relevant conversations.  It should provide sentiment analysis (positive, negative or neutral) around key conversational topics.”

Why do they need to perform “sentiment analysis”?

If someone is identified as being overly “negative” about the Fed, what will they do about it?

“The solution should provide an alerting mechanism that automatically sends out reports or notifications based a predefined trigger.”

This sounds very much like the kind of “keyword” intelligence gathering systems that are currently in use by major governments around the globe.

Very, very creepy stuff.

Are you disturbed yet?

For those of us that write about the Federal Reserve a lot, this is very sobering news.

I wonder what the Fed will think about the following articles that I have posted on this site….

*Unelected, Unaccountable, Unrepentant: The Federal Reserve Is Using Your Money To Bail Out European Commercial Banks Once Again

*Celebrating Independence Yet Enslaved To Debt

*19 Reasons Why The Federal Reserve Is At The Heart Of Our Economic Problems

*Is Ben Bernanke A Liar, A Lunatic Or Is He Just Completely And Totally Incompetent?

*10 Things That Would Be Different If The Federal Reserve Had Never Been Created

What is their “Social Media Monitoring Solution” going to think about those articles?

Unfortunately, this is all part of a very disturbing trend.

Recently, a very creepy website known as “Attack Watch” was launched to gather information on those saying “negative” things about Barack Obama.

Suddenly, everyone seems obsessed with what you and I are saying.

This just shows how the power of the alternative media is growing.

Not only that, but it seems as though the government also wants to gather as much information on all of us as possible.

For example, a new rule is being proposed by the Department of Health and Human Services that would force health insurance companies to submit detailed health care information about all of their customers to the federal government.

Every single day our privacy is being stripped away a little bit more.

But now it is often not just enough for them to know what we are doing and saying.  Instead, the “authorities” are increasingly stepping in to silence important voices.

One of the most recent examples of this was when Activistpost was taken down by Google.  We are still awaiting word on why this was done.

Sadly, the silencing of Activistpost is far from an isolated incident.

Hordes of YouTube accounts have been shut down for their political viewpoints.

Quite a few very prominent alternative media websites have been censored or attacked because of what they stand for.

So why is this happening?  Well, it turns out that the power of the alternative media is growing.  According to a new survey by the Pew Research Center for The People & The Press, 43 percent of Americans say that they get their news on national and international issues from the Internet.  Back in 1999, that figure was sitting at just 6 percent.

The American people are sick and tired of getting “canned news”, and they are increasingly turning to the Internet in a search for the truth.

As I have written about previously, the mainstream media in this country is overwhelmingly dominated by just 6 very powerful corporations….

Today, ownership of the news media has been concentrated in the hands of just six incredibly powerful media corporations.  These corporate behemoths control most of what we watch, hear and read every single day.  They own television networks, cable channels, movie studios, newspapers, magazines, publishing houses, music labels and even many of our favorite websites. Sadly, most Americans don’t even stop to think about who is feeding them the endless hours of news and entertainment that they constantly ingest.  Most Americans don’t really seem to care about who owns the media.  But they should.  The truth is that each of us is deeply influenced by the messages that are constantly being pounded into our heads by the mainstream media.  The average American watches 153 hours of television a month.  In fact, most Americans begin to feel physically uncomfortable if they go too long without watching or listening to something.  Sadly, most Americans have become absolutely addicted to news and entertainment and the ownership of all that news and entertainment that we crave is being concentrated in fewer and fewer hands each year.

The “news” that we get from various mainstream sources seems to always be so similar.  It is as if nearly all mainstream news organizations are reading from the same script.  The American people know that they are not getting the whole truth and they have been increasingly looking to alternative sources.

The monopoly over the news that the mainstream media once possessed has been broken.  The alternative media is now creating some huge problems for organizations that were once very closely protected by the mainstream media.

The American people are starting to wake up and they are starting to get very upset about a lot of the corruption that has been going on in our society.

But it turns out that the “authorities” don’t like it too much when Americans try to actually exercise free speech in America today.  For example, you can see recent video of female protesters in New York City being penned in by police and then brutally maced right here.

Are you sickened by that?

You should be.

What the “authorities” want is for us to shut up, sit in our homes and act as if nothing wrong is happening.

Meanwhile, they seem determined to watch us more closely than ever.

So are you going to be afraid to talk negatively about the Federal Reserve now that you know that they are going to be watching what you say on the Internet?

Please feel free to leave a comment with your thoughts below….

Unelected, Unaccountable, Unrepentant: The Federal Reserve Is Using Your Money To Bail Out European Commercial Banks Once Again

For a moment, imagine that there is a privately-owned organization in the United States that can create U.S. dollars out of thin air whenever it wants and can loan that money to whoever it wants to.  Imagine that this organization is able to act with the full power of the U.S. government behind it, but that nobody in the organization is ever elected by the American people, and that for all practical purposes the organization is not accountable to the president or to Congress.  Imagine that the organization is able to make trillions of dollars of secret loans to banks, to foreign governments and even to their close friends without ever having to face a comprehensive audit.  Does that sound preposterous?  Well, such an organization actually exists.  It is called the Federal Reserve, and today we found out that once again the Fed is going to be taking huge piles of your money and loaning it to commercial banks in Europe.  The Congress cannot overrule this decision.  Neither can Barack Obama.  Because it has so much power, many refer to the Federal Reserve as “the fourth branch of government”, but unlike the other three branches of government, there are basically no significant “checks and balances” on the Federal Reserve.  If you don’t like the fact that the Federal Reserve is racing in to help big foreign banks survive the European debt crisis that is just too bad.  The Federal Reserve pretty much gets to do whatever it wants to do, and the folks over at the Fed simply do not care whether you like that or not.

So what in the world just happened today?  The following is how an article on CNBC explained it….

Just ahead of the Wall Street open Thursday, the European Central Bank, along with the U.S. Federal Reserve, Bank of England, Bank of Japan and Swiss National Bank announced they would offer three-month dollar loans to Europe’s commercial banks, easing dollar funding constraints.

It must be nice to do whatever you want without having to get the approval of anyone else.

What do you think Barack Obama would give for such power right about now?

The Federal Reserve and other major central banks around the world decided that lending big European banks gigantic piles of dollars would be a good idea, so they are just doing it.

No debate, no votes and no democracy – they just tell us how things are going to be and that is that.

It is a bit ironic that all of this happened on the third anniversary of the collapse of Lehman Brothers.  It is almost as if the central bankers of the world are trying to send some sort of a message.

So how much money is going to be loaned out?

Well, according to an article in The Daily Mail, big European banks are going to be able to borrow an “unlimited” amount of money….

The deal announced yesterday means banks will be able to borrow ‘any amount’ of money in three separate auctions in October, November and December. Banks will have to put up collateral, or security, to tap the emergency funds.

Wow – I wish someone would offer to lend me an “unlimited” amount of money.

But of course this really is not going to solve anything in the long run.  You can’t solve a raging debt problem with more debt.

Yes, it will help the big European banks with their short-term liquidity problems, but it will do nothing to fix the long-term structural problems that are tearing Europe to pieces.

Win Thin, a senior currency strategist at Brown Brothers Harriman, said essentially the same thing to CNBC today….

“They’re taking care of the symptoms, but the underlying illness is still out there. On the margin, it’s positive. Until Greece defaults and we clear this whole thing up, they’re still treading water”

So, no, the financial problems of Europe have not been solved.

Just think of this latest move as a temporary band-aid.

So why get upset about it?

Well, what all of this shows is just how arrogant the Federal Reserve is.

The Federal Reserve gets to throw around trillions of dollars without any accountability to the American people.

As I have written about previously, the Federal Reserve made $16.1 trillion in secret loans to their friends during the last financial crisis.

This was revealed in a GAO report, and members of Congress such as Ron Paul and Bernie Sanders tried to get people to pay attention to this.  The following is a statement about this report that was taken from the official website of Senator Sanders….

“As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world”

So how much of that money went overseas?  Well, it turns out that approximately $3.08 trillion of that money was loaned to big banks and major financial institutions in Europe and Asia.

Barack Obama can’t lend trillions of dollars to foreign banks.

So why does the Federal Reserve get to do it?

Sadly, most Americans know very little about the Federal Reserve.  In the United States today, most Americans graduate from high school without ever learning much of anything about the Fed.

But if you really want to understand what is going on with our economy, it is absolutely critical that you understand the Federal Reserve.

The following are some more reasons why you should be upset about what the Federal Reserve has been doing….

*The Federal Reserve is a perpetual debt machine.  Today, the U.S. national debt is 4700 times larger than it was when the Federal Reserve was created back in 1913.

*The Federal Reserve has recently been actually paying banks not to make loans.  Right now banks can park money at the Federal Reserve and make risk-free income without having to make loans to the American people.

*Current Federal Reserve Chairman Ben Bernanke has a track record of failure that is legendary, and yet George W. Bush and Barack Obama both backed him 100%.

*The Federal Reserve system is designed to create inflation.  The truth is that the United States has only had a persistent, ongoing problem with inflation since the Federal Reserve was created back in 1913.

*Since 2008, what the Federal Reserve has been doing to our money supply has been absolutely insane.  Eventually this is going to have very serious consequences for us.

*The U.S. government has handed over the task of “centrally planning” our economy to the Federal Reserve.  The Fed decides what the target rate of inflation should be, what the target rate of unemployment should be, what interest rates are going to be and what the size of the money supply is going to be.  This is quite similar to the “central planning” that goes on in communist nations, but very few people in our government seem upset by this.

*The Federal Reserve picks “winners” and “losers” in the financial system.  For example, when the last financial crisis hit, the Fed bent over backwards to help out the big Wall Street banks, but hordes of small banks were left out in the cold.

*As mentioned above, the Federal Reserve has become way, way too powerful.  The Fed is able to do a lot of things that the three branches of government are simply not able to do.  Fortunately, there are a few of our leaders that are alarmed by this.  For example, Ron Paul once told MSNBC that he believes that the Federal Reserve is now 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.”

As long as we continue to use a debt-based currency that is controlled by a privately-owned central bank, we are going to continue to have permanent inflation and government debt that expands at an exponential pace.

The “central planning” done by the Federal Reserve has created bubble after bubble after bubble.  Our dollars is on the verge of dying and our financial system is about to collapse.

The Federal Reserve system simply does not work.

Hopefully we can start sending more politicians to Washington D.C. that will be willing to stand up to the Federal Reserve.

But for now, the Federal Reserve is going to keep running around doing whatever it wants to do whether we like it or not.

The Federal Reserve Saves The Stock Market?

The Federal Reserve has saved the stock market!  Well, at least for a day.  That was one heck of a “dead cat bounce” that we saw on Tuesday.  Normally, after the kind of dramatic decline that we saw on Monday there is some sort of a rebound, but on Tuesday the market did not begin to soar until the Federal Reserve pledged to leave interest rates near zero until mid-2013.  Once the Fed made their announcement, the market went haywire.  At one point the Dow was down more than 200 points, but by the end of the day it was up 430 points.  It was a desperate move for the Federal Reserve to pledge not to raise interest rates for the next two years, and it has stabilized financial markets for the moment.  But what is the Fed going to do to save the stock market when it starts crashing next week or next month?  The underlying financial fundamentals continue to get worse and worse.  Europe is a mess, Japan is a mess and the United States is a mess.  The Federal Reserve can try to keep all of the balls in the air for as long as possible, but at some point the juggling act is going to end and the house of cards is going to come crashing down.

This move may calm nerves for a day or two, but there is still a tremendous amount of fear out there at the moment.  Many investors are pouring money into “safe havens” right now.  Huge amounts of cash are being poured into U.S. Treasuries and the price of gold is absolutely soaring.  The price of gold is up about $220 in just the last 30 days alone.

So how high could the price of gold go in the coming months?  Well, analysts at JP Morgan are forecasting that the price of gold could hit $2,500 by the end of this year.

Yes, that is how wild things are becoming.  The Federal Reserve is painting itself into a corner.  Never before has the Fed pledged to leave interest rates near zero for the next two years.  The following is an excerpt from the statement that the Fed released earlier today….

To promote the ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent.  The Committee currently anticipates that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.  The Committee also will maintain its existing policy of reinvesting principal payments from its securities holdings.  The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.

Needless to say, the rest of the world is not pleased by this nonsense from the Fed.  Yes, the Fed has stabilized financial markets for the moment, but a lot of ill will is being created with the rest of the globe.  The following is what Bruce Krasting had to say about how the rest of the world is going to react to this latest Fed move….

Brazil, Argentina, Korea, Indonesia are going to scream bloody murder over perpetual ZIRP. Russia is likely to get downright ugly with their rhetoric. I wouldn’t be surprised if they took this opportunity to vote with their feet and just abandon the dollar as a reserve holding. China will also make noise. They will make more calls for a new international currency to replace the dollar. The Central bankers in Japan and Switzerland are puking in the trashcan over this. Bernanke is exporting US deflation to them. Shame on the Fed for pursuing Beggar my neighbor policies. They deserve all the global criticism they are about to get.

The Federal Reserve is using up all of the ammunition it has available and the game has barely even begun.

Things are going to get a lot worse.  The U.S national debt continues to pile up at lightning speed.  The debt ceiling deal essentially does nothing to fix our debt problems.  Thousands of businesses and millions of jobs continue to leave the United States.  As a nation, we are constantly becoming poorer and we are constantly getting into more debt.

Meanwhile, Europe is on the verge of a financial meltdown and Japan has a “zombie economy” at this point.

Many fear that we could be on the verge of another major global recession.  The following is how a recent Der Spiegel article described the current global financial situation….

Many economists have been pointing out that last week’s panic resembled the fear that swept financial markets after the collapse of US investment bank Lehman Brothers in September 2008.

Then as now, banks stopped lending each money. Then as now, banks’ cash deposits at the central bank doubled within days. The European Central Bank reacted by assuring banks of unlimited liquidity in the coming months. It was an emergency measure that led to short-term relief but sparked anxious questions among bankers and stock market players. How long can the central bank keep up its market-soothing liquidity operations before it finally loses its credibility, the most important asset of a central bank? Is the financial crisis about to escalate?

In the old days, the U.S. and Europe could just borrow gigantic stacks of cash in order to solve any problems.  But now things are dramatically changing.

China’s official news agency recently stated that the U.S. needs to understand that things are different now….

“The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone”

Not that the U.S. government and the Federal Reserve are going to suddenly give up their old habits.  The U.S. government is addicted to debt and the Fed is addicted to printing money.  When push comes to shove, they are going to resort to their favorite tricks.

But at some point the rest of the world is not going to play along anymore.  When that moment arrives, it is going to be very interesting to see what happens.

Meanwhile, the U.S. economy continues to slowly unravel, and people in this country are getting very angry.  Millions of Americans families are barely scraping by right now.  Most Americans just want someone to “fix” things, but unfortunately there are no easy “fixes” to our financial problems.

As our economic problems grow even worse, frustration inside the United States is going to continue to escalate.  A brand new Rasmussen survey found that only 17 percent of Americans now believe that the U.S. government has the consent of the governed.

That was a brand new all-time low.

Faith in the major institutions of our society is already dangerously low and the economy is not even that bad yet.

As horrible as things are now, the truth is that this is rip-roaring prosperity compared to what is coming.

In the months and years ahead, America is going to be greatly tested.  As the recent London riots have shown, things can spiral out of control very quickly.

When the economy completely collapses will America be able to handle it?

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