Inflation: The Emporers New Clothes

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published in a newsletter or any other form by anyone who chooses
to do so as long as it is properly accredited. My true hope is that
this information reach as many people as possible.

THE EMPERORS NEW CLOTHES
An article by Paul Hanson

in.fla.tion:NOUN 1. The act of inflating or the state of being
inflated.
2. ECONOMICS An abnormal increase in available
currency and credit beyond the proportion
of available goods, resulting in a sharp
and continuing rise in price levels.

The above definition comes from the American Heritage Dictionary
On-line at the Beaverton, Oregon public library. If you look it up
yourself, don't use just one dictionary, use many. All of them that
I've checked basically match the one given here.

I would like to prove the above definition by using an analogy
I once read. This definition will also be proven by other evidence
provided later. I have added a few more comparisons to todays
economy and am not quoting the original directly:

A fairly isolated and primative island community has a flourish-
ing local economy and uses seashells as a medium of exchange. Not
all seashells are the same, and some types are not as plentiful as
others. The rare and beautiful seashells can be exchanged for more
goods and services than common ugly ones. This is very similar to
our different denominations of federal reserve notes.

The seashells are also used for things like horns, bowls,jewel-
ery, are crushed and used as sparkling body paint during tribal
rituals ect... This compares to our use of gold and silver for
jewelery, money (once apon a time), industrial purposes ect...
The seashells that are removed from circulation this way, are
replaced by collecting new shells washing up on the beach. This
would be comparable to the mining of precious metals.

Over the years, the amount of shells washing up on the beach
averages out and remains fairly constant as does the amount taken
out of circulation each year. For the purposes of this analogy,
we'll say that the amount added each year roughly equals the
amount removed. With this being the case, as more goods and servi-
ces are produced (a growing economy, caused by population growth,
desire for an improved lifestyle and good ol' human ingenuity) the
seashells will increase in value. This is simple supply and de-
mand ecomomics. This also shatters the myth that economic growth
(a so called "hot" economy) causes inflation or that you can't
have economic growth during a deflationary period. The islanders
will still need goods and services and will just make do with the
seashells at hand. The seashells will just increase in value to
balance out the rise in the level of goods and services.

Early one morning an industrious family of insiders, oops I
mean islanders, let's call them the Warburgs, decide to paddle
out beyond the horizon in some outrigger canoes. Around noon or
so they spot another island off in the distance and decide to
check it out. When they reach the island they discover it is un-
inhabited and the beaches are loaded with seashells. The Warburgs
are shocked at first and then suddenly realize their good fortune.

They formulate a plan on this island, we'll call it Jekyll
Island, to sneak the newly discovered seashells ashore on the home
island and stash them away. Next they plan to set up a seashell
bank and introduce the new shells into circulation. This will have
to be done slowly so they won't draw too much attention to them-
selves. They also made plans to return to Jekyll Island often and
collect more shells.

When the Warburgs returned to the home island, they carried out
their plans and became very wealthy.

Well, the effects of the Warburgs actions slowly became obvious.
Each year as more and more seashells were put into circulation,
they became very common. Merchants and laborers began to demand
more for their goods and services because the seashells were less
rare and had lost value. The seashells were eventually no longer
used as jewelery (the men and women used to wear them to show
wealth). In order to show any amount of wealth now, the neck-
laces became so heavy they would break or the people would become
top heavy, loose their balance and tip over. The economy of the
island was ruined.

What happened on this small island is happening in America
today. We have had yearly inflation for a long time. Some years
more inflation, some years less. But it remains persistent.

What's caused the inflation? An increase in the amount of
currency (seashells). This is proven by the definition given
earlier and the previous analogy. It'll also be proven by a chart
which I will show later.

I would like to ask a question here that might help in explaining
exactly that I'm trying to say. That question is: "What would happen
to the prices at an auction if I walked in and handed everyone there
1,000 dollars in cash?" Remember, the amount of goods at the
auction has not changed, just the level of cash on hand to pay for
them has. The prices at the auction would obviously raise. Again,
simple supply and demand economics.

With all of the above in mind, I would like to point out some of the
flaws in the theories on inflation held by most economists today. I would
also like to shine the light of day on some of the propoganda issued by
the Federal Reserve System and its apologists.

Let's start off with some little known facts about "our" Federal
Reserve System.

1.) Even though it carries the name "Federal", It is actually
privately owned. This can be verified by calling them at:
202-452-3000 and asking this question: "I would like to know
the names of the 4 leading class A stockholders in the
Federal Reserve System?"

Call them and ask. I did. I was told that no one in the PR dept.
was able to answer my question at that time. I was told they were
"out to lunch".

If it really were a government agency, anyone who answered the
phone there could have told me "government agencies don't sell
stock."

Update: I have called them three times and left a message for
the person who could answer my questions. I made arrangements with
them to have him return my call at his convenience. It doesn't
surprise me that he has not returned my call. He was supposed to
call me on Wednesday June 29th, 1996 at 9:30 e.s.t. I'm still
waiting.

I have been told that this information on "class A" stockholders
is not released to the general public and they will probably say
so. However, I don't need them to tell me so because written proof
that there are stockholders is contained in the Federal Reserve Act
as codified into law. It appears in Title 12 USC (United States
Code) Chapter 3 Subchapter VI sections 281-290. Stock is purchased
at a fixed rate of $100.00 a share (sec.287). No individual, Co-
partnership, or corporation may own more than $25,000 worth of stock
(sec.283). This guarantees their permanent monopoly. The privately
held stock is also transferrable (sec.283). Banks who become members
in the Federal Reserve system are required by law to convert 6% of
their assets to Fed stock (sec. 282). The law also guarantees the
stock holders an annual fixed rate of return of 6% on their invest-
ment (provided that all the Feds bills are paid first) (sec.289). I
would assume then that the $25,000 figure must apply only to
private citizens and not to member banks of the Federal Reserve
System since that would prevent any bank with assets in excess of
$416,000.00 from becoming members. Since when is a private citizen
allowed to buy stock in a government agency?

The Fed also pays postage. Government agencies don't. I can't
reproduce a postmark here but it's very easy to check by writing
them a letter asking questions that require a response.

The Fed branch banks also pay state and local taxes on real
estate. Title 12 USC Chapter 4 subchapter I section 531 states:

" S 531. Exemption from taxation
Federal reserve banks, including the capital stock and surplus
therein and the income derived therefrom, shall be exempt from
Federal, State, and local taxation, except taxes upon real
estate."

Agencies of the federal government don't pay real estate taxes.
They don't pay property taxes for the use of the land where federal
buildings are located. Why does the federal reserve need a special
tax exemption written into law anyway? Isn't tax exempt status
automatic for a government agency? All of these laws fly in the face
of standard procedure for a government agency and proves that there
are stockholders.

2.) It has never been audited by an independent source. Oh
sure, they may have counted pencils and office furniture
but the way our money is handled has never been audited.

Proof of this is contained in two articles I found. The first
in The Wall St. Journal Dec.10 '93 pB5B western edition and p
A7B eastern edition. The title is: "Fed's Audit System Needs Big
'Revisions,'Inspector General Says" I won't quote the entire
text but I'll quote enough to prove my point.

"The Federal Reserve's system for auditing its 12 reserve
banks is too cozy and needs 'major revisions'....
The problem...is that the Fed's Division of Reserve Bank Oper-
ations and Payments Systems is responsible both for the day-to-
day oversight of reserve banks and for auditing them. This dual
responsibility doesn't meet impartiality standards established
by the American Institute of Certified Public Accountants, ac-
cording to the Fed's inspector general, Brent Bowen.
'We believe there is an appearance of a lack of independence,'
his report says. It proposes that the Fed either fully segregate
the audit program or hire an outside auditor."

The report cited in this article is from the horse's mouth,
the Fed'S own inspector general Brent Bowen, and clearly states
that the Federal Reserve audits itself.

The second article that proves a lack of auditing from an in-
dependent source was found in the Christian Science Monitor June
8 '93 p.20 column 3. The title is "Reforming the Federal Re-
serve." It was written by Representative Lee H. Hamilton (D) of
Indiana. Again, I won't quote all of the article here for the
same reason I gave above.

Text:
"...It (Congress) should also enact long-needed reforms in the
Washington institution that controls monetary policy: the Federal
Reserve. The health of our economy and the strength of our nation are
strongly influenced by fiscal and monetary policies made in Wash-
ington. Those who decide fiscal matters-the president and Con-
gress-are accountable to the voters. When Congress debates policy,
it does so in the open. The decisions we make are immediately re-
ported to the American people.
Every penny the government spends is subject to audit and review
by the General Accounting Office (GAO). But the Federal Reserve is
not held to the same standards. It does not conform to the normal
rules of government accountability. Its decisions are made in
secret and revealed only after long delay. It is not required to
consult with Congress or the White House before setting money-
supply or interest-rate targets.
...And even though the Fed engages in more than $1 trillion in
financial transactions each year, most of these are exempt from
GAO audit."

Part of what Hamilton wrote also helps prove the next point
made in this article. I feel that Rep. Hamilton is has
the credentials necessary for his statements above to be beyond
reproach. He's chairman of the Committe on Foreign Affairs of the
U.S. House, co-chairman of the joint Committe on the Organization
of Congress, and the former chairman of the Joint Economic
Committee and a member of the Council on Foreign Relations, which
I have more to say about later.

3.) The Federal Reserve doesn't answer to anyone but itself.
Congress, which created the Fed, can't direct it's
actions.

The World Book Encylopedia 1993 edition had this to say on the
the totally independent actions of the Fed:

"The Fed gets no funding from Congress. It raises all its oper-
ating expenses from investment income and fees for its services.
It pays no interest to banks on cash reserves banks keep at the
Fed. The Fed reports to Congress about its proposed policies but
is LEGALLY FREE to make its own policy decisions."
(Emphasis added)
World Book Encylopedia, 1993 edition volume F p.66

4.) The only control our government has is in the selection of
the board members. This control is excercised by the Presi-
dent. However, once board members are appointed, they serve
14 year terms. This timespan will outlast any two terms of
one U.S. President and 1 1/2 terms of another.

The source for this information comes from World Book Encylopedia,
1993 edition volume F p.65:

"The Board of Governers administers the system. It has seven
members. Each member is appointed by the President of the United
States to a 14 year term, subject to the consent of the U.S.
Senate."

A large majority of the appointees to the Fed's board of governors
are members of the Council on Foreign Relations, and come from the
New York banking community:

Alan Greenspan, current Chmn. Federal Reserve Board of Gover-
nors, current Chmn. Federal Open Market Committee, member of The
Council on Foreign Relations and a former member of the Trilat-
eral Commission.

A. William Reynolds, current Chmn. Fed bank Cleveland and a mem-
ber of the Council on Foreign Relations.

Ellen V. Futter, current Chmn. Fed bank New York and a member of
the Council on Foreign Relations.

Robert P. Forrestal, current Pres. Fed Bank Atlanta and a member
of the Council on Foreign Relations.

E. Gerald Corrigan, former president Fed bank New York, former
Vice Cmmn. Federal Open Market Committee, and a member of the
Council on Foreign Relations. Corrigan was succeeded by William
J. McDonough on 19 July, 1993.

William J. McDonough, current Pres. Fed bank New York, Vice
Chmn. Federal Open Market Committee, and a member of the Council
on Foreign Relations.

Paul A. Volker, former Chmn. Federal Reserve Board of Governors,
member of the Council on Foreign Relations and the Trilateral
Commission.

Richard N. Cooper, former Chmn. Fed bank Boston, member of the
Council on Foreign Relations, and the Trilateral Commission.
Bobby R. Inman, former Chmn Fed bank Dallas and a member of the
Council on Foreign Relations.

Robert F. Erburu, former Chmn. Fed Bank San Francisco and a mem-
ber of the Council on Foreign Relations.

This list is not all inclusive but I think I've made my point.
Source: Council on Foreign Relations Annual Report '91-'92.

Much of the information given in statements 1-4 of this article
came from from James Perloff's "The Shadows of Power: The
Council on Foreign Relations and the American Decline" p24. This
book is an excellent source of information on the Council on Foreign
Relations mentioned in 4. Since I have vindicated the section in
Perloff's book on the Federal Reserve through independent research,
it would appear that Perloff's work merits further study. His book is
extremely well documented with over 300 footnotes for less than 170
pages of text. Please check out the reviews on amazon.com for "The
Shadows of Power."

According to the definition given at the beginning of this ar-
ticle, the Fed has been the sole source of inflation since it's
inception. They have exclusive control over the supply of money
and credit in this country. The Fed excercises this control in three
ways:

1) By controlling interest rates
2) The actions of the "Open Market Committee" which is involved
in the buying and selling government securities.
3) By controlling member banks reserve requirements. Todays banks
practice what is known as "fractional reserve banking". I have
much to say on this subject but will save it for another arti-
cle. This system is dishonest and if the whole truth were
known, it is very possible that a major run on the banks would
occur and the house of cards would fall.

This Information can be found in the "World Book Encylopedia"
1993 edition p.66 under section "Federal Reserve System". This
information can also be found in Title 12 USC sections 229 and
following.

By increasing the money supply, the Fed is causing the inflation.
Here's the proof, taken from the "Encylopedia of American economic
history". printed 1980, Carles Scribner's Sons:

"...The quantity theory (of money supply) asserts that a fairly
regular relationship exists between the nominal stock of money
and the level of national income, This relationship can be
written as (1) M = k + P + y where M is the stock of money, k
is the proportion of nominal income held as money, P is the price
level, and y is the level of real income. If logarithms are tak-
en and the resulting equation is then differentiated with respect
to time the resulting equation is__.___.___.___.
........................................(2) M = k + P + y where a dot
over a variable indicates its percentage rate of change.____.
This equation is always true in the tautological sense that a k
can be found to equate both sides of the equation.

...........................................TABLE 1
Long-Term Trends in the Stock of Money and Related Variables
=================================================================
........................... Annual Percentage Rate
.....................................of Growth of
______________________________________________________________
......................................................................Ratio of
........................Stock of......................Real.....Money to
.........................Money.......Prices........GNP....Nominal GNP
________________.__________.________._________.
...Period.............(M)............(P)..........(y)............(k)
_____________________________________________________________________

...1890-1978.......6.11..........2.53..........3.24..........0.34

...1890-1913.......6.04..........0.82..........3.97..........1.25
...1913-1923.......8.44..........5.33..........2.33..........0.78
...1923-1929.......4.03.........-0.23..........3.41..........0.85
...1929-1939.......0.56.........-1.58..........0.28..........1.86
...1939-1948.....12.23..........6.79..........4.84..........0.60
...1948-1967.......4.24..........2.05..........3.87.........-1.68
...1967-1978.......8.51..........6.11..........2.76.........-0.36
_________________________________________________________________
Sources: 1890-1967 U.S. Bureau of the Census, 'Historical Statis-
tics of the United States, Colonial Times to 1970'; stock of
money, part 2, series X 415, p. 992; prices, part 1, series F5 p.
224; real GNP, series F3, p.224. Data for 1967-1978 are from the
'Federal Reserve Bulletin'.
Note: Money is defined as currency plus demand and time deposits
in commercial banks. The price index is the GNP deflator.

...During the period 1890-1978 the money stock grew at an annual
rate of close to 6%. This rate was distinctly faster than the
growth of real output....Over the period 1890-1978 this ratio
grew at 2.87% per year (6.11 minus 3.24). What has been the effect
of this increase?...The positive k of 0.34 indicates that the
economy has tended to increase the proportion of nominal income
held in the form of money....But the offset provided by a posi-
tive k has been small The rising trend in money per unit of out-
put has produced a positive long run increases in prices at the
rate of 2.53% per year." (emphasis added)

The numbers speak for themselves. They cleary indicate a direct
relationship between the increase in the supply of money and the
resultant rise in the general price level. The Fed has caused the
inflation. This fact should be painfully obvious to anyone who has
opened a dictionary and checked the definition of inflation then
applied it to the inscription at the top of all "dollar bills"
(Federal Reserve Note). By doing so, it will show who is responsible
for the inflation.

Why then isn't this fact brought to light by today's "well educa-
ted" economists? They seem to haggle over everything but the true
cause of inflation. Some proof of these bogus theories by economists
can be found in an article written by Julianne Malveaux in the May
24th, 1994 Oregonian:

"While many traditional economists consider the current 6.4
percent unemployment rate 'too low' based on the presumed Phillips
curve trade-off between inflation and unemployment, others say
that the 'natural rate' of unemployment (the rate at which
inflation does not accelerate) is closer to 5.8 percent..."

I say this is simply untrue and here's why:

"...The step-up in monetary growth to 7.3% in 1969-1977 pro-
duced a great increase in the inflation rate combined with a
rise in unemployment and a slowdown in the growth of real out-
put. The interest rate on corporate AAA bonds, which had been
virtually constant around 4.5% in 1959-1965, rose to more than
8% in 1970. The period following 1970 was a policy-maker's night-
mare, with high rates of interest, inflation, and unemployment
existing side by side"
Source: Encylopedia of American Economic History.
Charles Scribner's Sons printed 1980.
page 750. (emphasis added)

The above section "Central Banking" of this encylopedia used a
table on page 751 very similar to the one I quoted earlier (also
from this encylopedia). The chart clearly indicates the rise in
inflation was accompanied by a rise in unemployment. I will not
reproduce the chart here because this proof is already too long
but any medium to large sized library should have a copy of this
excellent reference work.

Malveaux's article states that inflation and unemployment rates
are inversly proportional to each other. The data for the period
1969-1977 show just the opposite.

Now I ask this question: Which explanation of inflation and its
causes holds water and is completly supported by the facts? Again by
Malveaux:

"I do not think a high unemployment rate has to be the price we
pay for low inflation. Further, the current weak job market...is so
differently configured from the one that generated the Phillips
curve analysis that I would argue that the relationship is much
flatter than it used to be, and that inflation would not 'heat up'
until the unemployment rate under current conditions got as low as
5%."

Although Malveaux doesn't completely agree with her collegues,
she still uses the same flawed theory. And what was this author's
solution? More government control over the labor market! Read it
and see. The next paragraph speaks for itself:

"But as long as there is no labor market czar with as much power
as the chairman of the Federal Reserve Board, the interests of
labor will take a back seat to concerns about inflation."

Incredible! This article was written by Julianne Malveaux, syndi-
cated columnist and an economics professor at the University of
California, Berkley. Economics professor?

Unless the definition given at the beginning of my article was
wrong, The entire premise of this piece written by Malveaux is
is a lie.

Maybe I should check another source:

in.fla.tion: 2 An increase of money and credit relative to
available goods resulting in a substantial and
continuing rise in the general price level.

(Websters 3rd International Dictionary una-
bridged copyright 1961, emphasis added.)

Don't take my word for it, Look it up yourself. Dust off that
wonderful book and put it to some good use. If Webster is correct,
(which he is, by the evidence provided here) then what of this
character Phillips and his trade-off curve? I suggest that he take all
his notes and statistics that generated the curve and use them for
kindling in his fireplace, they would be much more uselful that way.

There are many other misleading theories used by the Fed and
others to cover up the inflation the Fed is actually causing.
However, space will not allow me to cite them all. A list of
articles published in major newspapers will be included at the
end of this article to use for your own personal research.
Take care that you are not misled by the lies they contain.

Why does it take an average joe like me to point the fallacy
perpetrated by these so called economists? I feel like the young
boy in the story "The Emperor's New Clothes" Many leading
economists are going along with the farce that inflation is tied to
unemployment rate and economic growth. Malveaux admitted it.
She said "While many traditional economists consider...others
say that..." This would seem to leave very few left over. Since she
is "one of them" she should know the views of her colleagues.
These economists repeat much of the drivel issued by the Fed
and it's "tailors". I, on the other hand, look in a dictionary and
strip away the invisible clothes the Fed claims to be wearing.
Why is this so? Is it because these economists really believe the
Fed isn't responsible? I liken them to the "Emperor's
subjects" were afraid to say anything out of fear of ridicule.

I don't feel that fear is all that is involved here however. I feel
there is something far more sinister afoot. Even our Congress (with
rare exceptions) doesn't challenge the Fed on the issue of inflation.
Some rare exceptions in the past have been Congressmen Charles
Lindberg Sr. and Louis McFadden, and more recently,
Congressmen Henry B. Gonzalez and Ron Paul.

In my opinion, the Fed is nothing more than a licensed counter-
feiting organization. This license was unconstitutionally granted by
congress in the form of the Glass Owen Act also known as the
Federal Reserve Act. Their actions match the actions of counterfeiters.
What is a counter feiter guilty of? He is guilty, by the above definitions,
of inflation. A counterfeiter increases the money supply and the table
presented above clearly shows its link to rising prices. Counterfeiters
are also guilty of theft because every time they turn on the printing
press, the value of the money in our pocket declines. As prices increase,
purchasing power decreases. Where did the purchasing power go? It
went to the fed and the big banks that are the major stockholders in the
Federal reserve system. A counterfeiter also receives something for
nothing. They do this when bogus bills are exchanged for goods and
services or "lawful money".

Now, I'm not saying that new currency and credit should never
be added to the system, although an extended period of this might
help restore some of the value of our dollar that has been stolen
from us. The chart seems to indicate this. during the period 1923-
1929, "the roaring 20's" the money supply increased only slightly
faster than the GNP. During this period, prices fell and savings
increased (positive k). From what I've read in the past, most of the
increase in the money supply during this period occurred just before
the stock market crash during 1929. The federal reserve stomped on
the gas and then slammed on the brakes. I will explain this in more
detail later.

What I am saying is the Fed adds far more currency and credit to
the system than is actually needed. They create this money out of
thin air, loan it to us with interest, and in the process are
stealing the wealth of this great Republic right out from under our
noses!

The Feds creation of money was admitted by a governor of the
Fed. The man's name was Marriner S. Eckles. During testimony before
the House Committee on Banking and Currency he was asked where the
money that the Fed introduces into the system comes from. He replied
"We created it." This testimony took place on Sept. 1, 1941 and
can be verified through the Congressional Record for that date.

The way the system is set up, if we were to pay off the loans
from the Federal reserve banking system, we wouldn't have any
currency in circulation! Where would we get the money to pay it
back? We would get it from the money and credit currently in
circulation. Since all of this money was created by the Fed, and
loaned into existence, with accrued interest added in, the amount
owed would be more than what is available. By paying off all public
and private debt we would leave ourselves with no currency to
conduct daily business and we would still owe them more because
the interest for those loans was never created, just the principle. Every
dollar in circulation was loaned into existence and is earning interest for
some banker somewhere. You're probably thinking this simply couldn't
be true. Well it is! The proof of this can be found in a book entitled
"100% money" by Irving Fisher. The forward was written by Robert
Haphill who was a credit manager for the Federal Reserve Bank
of Atlanta:

"If all bank loans were paid, no one could have a bank deposit,
and there would not be a dollar of coin or currency in circu-
lation. This is a staggering thought. We are completely dependent
on the commercial banks. Someone has to borrow every dollar we
have in circulation, cash, or credit. If the banks create enough
enough synthetic money we are prosperous; if not, we starve. We
are absolutely without a permanent money system. When one gets a
complete grasp of the picture, the tragic absurdity of our hope-
less situation is almost incredible, there it is."

Again this is from the horse's mouth, a credit manager at the
Fed bank of Atlanta and absolutely verifies everything said in
the above section of my original article. He is not being
entirely truthful here though. The board of governors of the Fed
control the reserve requirements that commercial banks must keep
on hand. He seems to blame our dire situation on the "commercial
banks" when the Fed is ultimately in charge. The Fed is also the
lender of last resort to the commercial banks.

We have had the wool pulled over our eyes for far too long.
Since at least Dec. 23, 1913 (date congress passed the federal
reserve act). Note the date here. It appears to have been rammed
through Congress at a time when many had possibly returned home for
the holidays. Some Christmas present. Isn't it about time we abolish
the Fed and create our own debt free money? Where would this
Authority come from? From our Constitution. Article 1 section 8 of
the U.S. Constitution under the section pertaining to the powers of
Congress states:

"To coin money, regulate the value thereof, and of foreign coin,
and fix the standard of weights and measures: To provide for the
punishment of counterfeiting the securities and coin of the United
States:." These are the exact words as they appear in the Consti-
tution and its the solution to our current problem. Congress not
only has the power to coin money (a power that cannot be delegated
to the Fed or any other entity) it also has the power to punish
counterfeiters.

Should an audit show the Fed has been abusing it's powers, and it
will, they should be tried as counterfeiters. Or, should we ignore their
actions and let them continue to destroy the wealth of the nation? I say
no! Abolish the Fed! Again, by the above definitions of inflation, the
Fed is the sole source of our inflation problems. Inflation is caused by an
increase in the money supply and the Fed has control over that supply.
They are criminals and should be treated as such.

I would like to use part of a quote here: "Consistency has never
been a mark of stupidity" (James Forrestal). A claim of ignorance
by the the Fed simply won't do. The Fed has continually supplied
more money to the system than is actually needed. This always
works to their advantage because the more money they supply, the
more interest they collect. The continued errors in their favor
indicate a deliberate attempt to corrupt our dollar. There are
some who say that the Fed deliberately expands and contracts the
money supply to cause booms and busts in the economy. This could
be compared to stomping on the gas pedal in your car then sudden-
ly slamming on the brakes over and over again. By knowing when
these were to occur ahead of time, you would be able to make a
killing in the stock and money markets. It's called insider trad-
ing and there are people in prison right now for this committing
this crime.

Do we allow a criminal to keep what he has taken from his vic-
tim? Certainly not, so neither should we pay the Fed any debt
currently owed. In fact, the assets of the Federal Reserve banks and
it's class A stockholders should be seized and held as restitution
for repayment to the victims (that is us) of this heinous crime. This
occurs all the time in our criminal justice system. Those assets
could also be used to pay off the bonds issued by the Fed to anyone
who has purchased them. This should be done for anyone who bought
them without knowing what the Fed was really up to. The people
investing in bonds should not have to suffer for the crimes of
others. The large banks who are members of the federal reserve system
and own most of the stock have been the main benificiaries of this
system and should pay these people their money.

These are just some ideas I have to help dig our way out of this
hole the Fed has dumped us into. I think they are very reasonable
(to everyone but the big banks) and should be given some serious
consideration.

And what type of system of monetary exchange should be used to
replace that den of thieves at the Fed? A question that has been
very difficult to answer over the centuries. If man were perfect,
a paper money system could work. However, man is inherently
greedy and can't be trusted. He is doomed to repeat the evil
actions that issuers of currency have always adhered to. Until
the evil in man is removed, I see no alternative than to issue
precious metal only. It seems our Founding Fathers felt exactly
the same way. The Constitution says nothing about paper money.
Will it work? Judging from our current system, it couldn't hurt
to try!

Look over the facts that have been presented here and decide for
yourself. See if your opinions match mine. If they do, Let's join
together and rid this great Republic of the terrible parasite
called the "Federal Reserve System" once and for all.

Thanks for your attention,

Paul C. Hanson

The Prosecution rests...