FEDERAL RESERVE BANK: Neither federal, nor a reserve, nor a bank.Submitted by sharkhearted on Tue, 03/27/2012 - 17:39
I realize this is old hat for many of you...but if you would like, please take a look at this post where I summarize G. Edward Griffin's chapter on what he calls the "Mandrake Mechanism" (the Fed creating money out of thin air) in his book the Creature from Jekyll Island.
Please see my summary below:
This Federal Reserve Bank system…is the biggest fraud perpetuated on the American people…in history.
It is neither “federal” (It is privately owned by the banks).
Nor is it a “reserve” (There is nothing of value in there, and no precious metal backing, and absolutely nothing in “reserve”).
Nor is it a “bank” (It is a cartel of the private banks whose sole purpose was to create “money” out of thin air.)
Modeled upon European central banks, it was the brainchild of about 6 or 7 men who, in 1910, representing about one-quarter of the wealth of the entire world, traveled to Jekyll Island, Georgia to create the banking cartel know as the Federal Reserve, and which was singed into law with the Federal Reserve Act of 1913.
Definition of a “cartel”: "A cartel is a formal (explicit) agreement among competing firms. It is a formal organization of producers and manufacturers that agree to fix prices, marketing, and production". (from Wikipedia)
Please don’t expect any of the following to make any sense. Below is the process, as summarized from the book excerpt in the following pages that I hope you will read:
The US Government needs money, and they need to bypass Congress for appropriations, and rather than raise taxes, they turn to the great magician, the Federal Reserve, who has its magic wand ready.
The Department of the Treasury conveniently always issues too many treasury bonds for the American public to buy.
These bonds are “IUOs” or “promises to pay” at a later date, and because the government can always raise more money off the backs of the American people by taxing them, the bonds, even though instruments of government debt, are considered to have value because they are backed by the “full faith and credit of the US Government.”
The excess Treasury bonds that nobody wants…sit around…waiting for an able buyer.
The Federal Reserve says “We’ll buy them.” So Ben Bernanke takes out his the Fed checkbook. This is a magic checkbook for sure, as the balance is exactly $0.00.
$1 Billion dollars of excess Treasury Bonds? No problem.
Mr. Geithner, here’s a check for One Billion Dollars.
At that minute, $1 Billion Dollars is created out of thin air. (This is called “fiat currency”. Backed by nothing of value, and decreed by some authority, or by “fiat”).
Now, if you or I wrote a check for $1,000, knowing that our balance was $0.00, you or I would go to jail.
But the Federal Reserve, with their magic checkbook, can write a check for $1,000 Million Dollars, and somehow it’s called…money! Actually, they have taken government debt, and created money. This is what is referred to as “monetized debt”.
With this new $1 Billion Dollar check, it is endorsed, and deposited back into a special government account in the Federal Reserve, and the government starts paying its bills.
So the brand new $1Billion Dollars, starts to circulate through to the commercial banks.
Thanks to the Federal Reserve’s generous ability to create money, they extend that ability to the commercial banks, who are under a “fractional reserve system” which means that they only need to keep 10% of their total deposits in “reserve”, and from that, they have the ability to lend out as much as 9 times of their total deposits.
Let’s say for simplicity’s sake that the $1 Billion Dollars the government paid its bills with, all ended up in one bank, Citibank, and Citibank’s balance before then was $0.00 Citibank, with their new value of total deposits at $1 Billion would be required to keep $100 Million in “reserve”, but could then lend out as new loans, up to $9 Billion Dollars of new money!
The wand waves again, and poof, $9 Billion Dollars is created out of thin air…and is added to the money supply.
And of course Citibank (and with the Fed waiting in the wings licking its chops) if it were loaning, say, at 10 % interest, makes a cool $900,000,000 in profit (in the first year alone!) off of money it did not earn, created out of nothing, and at no cost.
Not a bad gig. But of course, if you or I did that, we would be spending a long time in prison convicted of counterfeit charges!
Inflation…is the expansion of the money supply, where there is just so much ‘money’—but which is created out of government debt and backed by nothing of value—that each dollar is devalued and loses a degree of its purchasing power.
The banks and the Federal Reserve cartel, even in recession times, always prosper off of the interest. The inflation of the money supply, however, such as this $10 Billion new creation—which is but a small example of tens of trillions of fiat money added to the money supply over time—devalues the dollar, giving the American people less purchasing power, and enslaving them all with a hidden tax called ‘inflation’.
Since the Federal Reserve came into being in 1913, the value of the dollar has decreased by at least 97%.
It is not a coincidence that the Income Tax was instituted the same year (1913), as they knew, with this system, there would be massive inflation and a devaluing of the currency, so they better find a way to pay for it.
Guess who is stuck with the bill…again? You guessed it! The American taxpayer.
In Fraud we trust. The Federal Reserve. Ripping off Americans…since 1913.