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The Federal Reserve is not a

Contrary to the popular myths floating around the web, including the ones Bill Still promotes in an obvious role as a Fiat State infiltrator, The Federal Reserve is not a private company, nor is it owned by large commercial banks, nor does it operate for the sole benefit and greed of its stockholders, at least not the ones commonly thought of here and on the web.

Would you not say that the "owner" of a company or agency would get the most money out of the earnings of that company or agency? That is the common definition of ownership, the owner benefits from the bulk of the proceeds. The truth is that the U.S. Government receives the bulk of the earnings generated by the Federal Reserve Banking Systems, the minority ownership of the large commercial banks get a an extremely small return on their stake, in fact, less than 6% since out of the 6% mandated by the Federal Reserve Act is a gross return, all overhead must be paid out of that 6% before the dividends are paid to the banks that hold that very minor stake in the Federal Reserve. While it makes a good myth on the Internet, the facts are verifiable when it comes to the actual money paid to the majority stakeholder, i.e. the U.S. Government and the minor stakeholders, i.e. the various commercial banks.

To be honest with you, I find that just as offensive as if the Federal Reserve was solely owned by private commercial banks, if not more so. For too long many people have almost given the government a position of innocence when it comes to the Federal Reserve, but the truth is that the Federal Reserve acts on behalf of this government, for its benefit and for its ever-expanding power. The true stakeholder in the Federal Reserve is indeed the U.S. Government for without the FED there would a very different type of government in this country, one much more contained and manageable, one that was much more concerned by the Will of the People. The Federal Reserve and the Fiat Monetary Systems make it all possible.

Now, that being said, we then must consider the part private member banks play in the whole scheme of things as they revolve around the government created, government chartered and yes, government controlled Federal Reserve System and yes, the government uses bankers or quasi-banker agents to maintain the system, they are in fact nothing more than government bureaucrats. The FED, being the lapdog of the government, provides the government with all the instruments of banking without the common restrictions of banking, but it also includes in this system a vital corporate strata composed of the member banks, which insert themselves into the fiat monetary scheme through fractional reserve banking fraud. This monopoly power belongs to the government, but is administered through the Federal Reserve System. Even Federal Reserve Notes signify the ownership and authority of that ownership, which is the Seal of the U.S. Treasury and the Secretary of the Treasury's signature. The fact is that the U.S. Government is the actual beneficiary of the creation, the operations and, in particular, the secrecy of the Federal Reserve. Without the Federal Reserve and the fiat currency forced upon this country by the government legal tender laws, this government could not function because it would no way for it to tax the People, the Federal Reserve System allows the government to bypass the heavy burden of taxation that would be necessary to sustain the government at such a massive scale. The Federal Reserve and the fiat monetary system prevent revolt, among other things.

So, enter the privately owned member banks, there was a transition, which took about 67 years to move all private banks from a system outside the Federal Government authority to inside the Federal Government’s authority. This created a corporatist system of banking, integrating those banks, particularly State banks, into an umbrella system. The invitation to those private banks was by coercion rather than voluntary consent. Essentially, the government invited the private banks to join the system, become chartered under the system or face undue hardship and regulation to remain outside the system. By 1980, and the introduction of the Monetary Control Act, all U.S. Deposit Institutions were brought under the authority of the Governments Federal Reserve Banking System.

Because of the special authority granted by this government to its agency called the Federal Reserve, along with its evil twin sister the IRS, there is an absolute immense amount of wealth directed or redirected into the accounts of banks, all under the guise of managing the economy, controlling interest rates. The ability to control the money supply is one of the most powerful of forces utilized by government, it provides for the redistribution of wealth from a population unaware of the mechanics of the system, hidden behind the face value of its fiat currency, wealth from the productive members of society, working hard for their wages are oblivious that it is not the face value, but the purchase value of a currency that is meaningful. Thus, through inflationary depreciation the People have been suckered into thinking that there are making more money per hour just because they have more dollars showing on their weekly paychecks.

The banks, with the support of the non-productive monopoly created by government, siphon off the cream of wealth from the People of the country. It utterly denies the potential of wealth building to the majority of the People by funneling production through the fiat monetary system and the Socially Owned [government] Banking known as the Federal Reserve Banking System. It is a form of corporatism that is rarely considered because we have grown accustom to the wide-spread idea, and a convenient one it is, that the Federal Reserve is owned by the big bad private banking corporations, but the truth is much more horrifying because it is our own U.S. Government that is actually perpetrating this fraud upon us. That fact does not deny the capability of the large banking corporations; they are, in fact, partners in this criminal act. It is all a license to steal, to steal the fruit of our labors and the possibility of a prosperous future for our own posterity, as well as the welfare of this country as a whole.

I realize this is not the commonly held opinion and to be honest at one time I held the same opinion, but upon further research I reached a conclusion that is far more disturbing: our government is intent on subjecting us through a system of fiat peonage, using a system that began during the Lincoln Administration, but came to fruition in 1913. We have been systematically nailed to the wall and stretched out to dry by our own government and its agents of corruption.

All one need do is look at the money trail, it is easy to research and the money trail ends in the U.S. Treasury, not in any of the commercial banks. Even the Federal Reserve Act gives the amount of dividends paid to the minor stakeholders. You can find the amount of earnings and distributions in many Congressional Reports, in the GAO and even in other independent sources which track government monies. You will not find any source that will show the mass of earnings going to any other recipient other than the U.S. Treasury. To be sure, the member banks do greatly benefit from the arrangement, but not directly from the Federal Reserve Banking System, the direct beneficiary is the U.S. Government.

As far as Eustace Mullins is concerned, I have a number of problems with his "factual" information, as well as his political background. While I understand his popularity, as well as others who promote the now commonly held opinion about the private ownership of the Federal Reserve, I prefer a far more substantial view based upon facts rather than popularity. Let's face it, everyone loves a conspiracy, but we must concern ourselves with factual information about such conspiracies otherwise, as we see even here on the DP, people will divert themselves to disregard facts, even those staring them in the fact, for less accurate information and sometimes for misleading information.

If you can show me the money trail leading from the Federal Reserve earnings to those private banks I will be more than happy to research the matter, but thus far I have yet to find a direct infusion of the majority of earnings from the FED to those minority stakeholders and I have done a heap of research on the subject. Regardless, the Federal Reserve System is an enormous fraudulent system, created, promoted and primarily benefiting the Federal Government and it is managed, to a large degree, by private banking agents, but they are all on the payroll of the Government. The various minority owners of the Federal Reserve are just that minority owners, vital for its fraudulent functions, but still minorities in the actual ownership and control of the system...the real culprit is our own government, which, by any man's standard should cause a huge amount of indignation.

In Section 7 of the Federal Reserve Act, subsection 1A states:

After all necessary expenses of a Federal reserve bank have been paid or provided for, the stockholders of the bank shall be entitled to receive an annual dividend of 6 percent on paid-in capital stock.

The entitlement to dividends under subparagraph (A) shall be cumulative.
That portion of net earnings of each Federal Reserve Bank which remains after dividend claims under subparagraph (1)(A) have been fully met shall be deposited in the surplus fund of the bank.

Section 7 (1)(B): The Federal reserve banks shall transfer from the surplus funds of such banks to the Board of Governors of the Federal Reserve System for transfer to the Secretary of the Treasury for deposit in the general fund of the Treasury.

Interesting enough, the law stipulates a small portion of Federal Reserve stock may be available for sale to the banking public, however, there is a catch in the law which states that NO ORGANIZATION may own more than $25,000 of such public stock in the Federal Reserve and none of those shares carry voting rights.

Additionally, it would appear that there have been several occasions where the Federal Reserve has gone against some of those which many claim to be major stockholders, if the Federal Reserve and its monetary policies were indeed under the control of such stockholders then why on earth would the FED take certain steps that would preclude or hinder the operations of some of those so-called major stockholders in favor of a political position of the government? The fact that the Federal Reserve has acted at times on political “instructions” rather than that which would be favorable to the large commercial banks, such is an indication of ownership, but not by the large commercial banking houses or the families which are the majority stockholders in such banking houses, but the true owner: The Federal Government. The convergence of benefits to both the government and the banks is easy money and easy credit, it boost the profits of the banks and transfers wealth and power to the government through inflationary depreciation of the fiat currency regime. It also makes for a much more palatable political atmosphere publicly since has, until recently, provided the consumer addiction with their monetary and credit fix.

In fact, the legal structure of the entire Federal Reserve System precludes private bankers from determining the monetary policy of the Federal Reserve, in other words it is impossible for such a determination to be made based on the structure of the decision-making process of the Federal Board of Governors.There are also restrictions to the number of actual bankers sitting on the Board of Governors, there is a quota system involved. Now, given that fact, we cannot, based upon that structure and the fact that the Federal Reserve is owned by the Federal Government, preclude the fact that there is political policy influence by private banking, but it is not, to be best of my knowledge and research, direct influence, rather it is indirect through Congress.

Now, while it is true that the Federal Reserve makes a huge amount of profits annually, the bulk, between 94 and 97% of the net earnings of the FED are paid to the Treasury [a fact that is easily verifiable]. That leaves a very few percentages to be parceled out to the “shareholders” based on their “capital stock” which, by law, is extremely limited, but still a great deal of money by any measure. January, 2010 report of the Treasury states that the preliminary earnings of the FED was approximately $52.1 Billion Dollars, after the prescribed expenses were paid, the transfer to the U.S. Government via the Treasury was $46.1 Billion Dollars. Now the question is how much does it cost the FED to operate? Well, based on the reports I’ve read it appears that it cost the FED approximately $3.4 Billion to operate in 2009, but it also paid approximately $2.2 Billion Dollars in interest to depository institutions. Thus out of the $52.1 Billion Dollars only $6 Billion remains, out of that comes $5.6 Billion Dollars in operating cost which includes interest paid to depository institutions. After that is paid then the 6% dividend is paid to the member banks of the 12 Federal Reserve Districts. Contrary to the many theories that promote the idea that private member banks or large banking houses are making huge profits from owning stock and controlling the Federal Reserve, they are not. 6% dividends on the member bank stockholdings are, by any standard, modest in terms of a rate of return. All one need do is look at the net earnings of the FED in excess of the dividends to see that the actual owner makes the profit and that owner is our very own federal government.

Another thing that is important to consider regarding the supposed ownership of the Federal Reserve by large commercial banking houses and that is the member banks themselves. In order to gain a consensus, there would need to be control over the boards of a majority of member banks, each of whom have individual stockholders with voting rights of their own regarding the operation of each of those member banks. Each of the 12 Federal Reserve Districts probably contain thousands of member banks, to even gain control over a majority of them would be a mathematical miracle to say the least, especially since each of those member banks may have hundreds of thousands of private individual stockholders. Essentially, if it were true about the large commercial banks owning the Federal Reserve then they would have to hand-pick every CEO and board of the member banks and then be able to completely sway the private individual stockholders of each of those banks to back their position, whether that position was in the best interest of the private stockholders or not.

That would be an impossible task, just as impossible as the idea that the Federal Reserve can actually maintain, control or manage the economy with over 300 Million individual players in the market making trillions of moment by moment economic decisions effecting their own individual lives. Another fact that must be considered is that it appears whatever power or influence the member banks have on the Federal Reserve is very narrowly prescribed in the Federal Reserve Act. Perhaps some of the most informative documentation on the Federal Reserve is the actual debates in Congress on the subject during 1913 when considering the Federal Reserve Act, in fact those debates are extremely revealing if one would take the time to study them. Read the Congressional Record, 63rd Congress, 1st session, I, 513-514, 5992-96.

There are therefore, several disconcerting discrepancies within several of the sources you cite, such as those from Eustace Mullins, Bill Still, Mike Montagne, Ellen Brown and others. I am surprised however, that some on this thread did not mention Gary Kah who also wrote a similar book about the supposed ownership of the Federal Reserve by banking powers, of course you would quickly see the differences in opinion between the two authors on such ownership. Kah states that it are and have been an almost completely different lists of so-called owners, they both can’t be right…perhaps because they are, more likely, wrong. The discrepancy of course can’t be more obvious if one just look into the matter and that is that there has never been any public stock issued by the Federal Reserve.

As Rothbard stated so aptly in his small work entitled The Case Against The FED:

“By far the most secret and least accountable OPERATION OF THE FEDERAL GOVERNMENT is not, as one might expect, the CIA or some other super-secret intelligence agency…It is little known, however, that there is a FEDERAL AGENCY that tops the others in secrecy by a country mile”

Of course, he is speaking about the Federal Reserve as that ultra-secret agency, that federal government operation. Indeed, that is exactly what it is, an agency of the government.

Strangely enough, back in 1993 there was a Democratic Chairman of the House Banking Committee named Henry Gonzalez who introduced a bill to audit the Federal Reserve, stranger still the bill was co-sponsored by none other than Barney Frank, pretty shocking. The Gonzalez/Frank Bill would require full independent audits of the FED and would include complete Congressional Control over the FED’s budget. Of course, it didn’t get far because the cry of the Pro-FED politicians was that it must remain “independent of politics”.

Rothbard continues with the following:

"Independent of politics" has a nice, neat ring to it, and has been a staple of proposals for bureaucratic intervention and power ever since the Progressive Era. Sweeping the streets; control of seaports; regulation of industry; providing social security; these and many other functions of government are held to be "too important" to be subject to the vagaries of political whims. But it is one thing to say that private, or market, activities should be free of government control, and "independent of politics" in that sense. But THESE ARE GOVERTNMENT AGENCIES AND OPERATIONS we are talking about, and to say that government should be "independent of politics" conveys very different implications. For government, unlike private industry on the market, is not accountable either to stockholders or consumers. Government can only be accountable to the public and to its representatives in the legislature; and if government becomes "independent of politics" it can only mean that that sphere of government becomes an absolute self-perpetuating oligarchy, account- able to no one and never subject to the public's ability to change its personnel or to "throw the rascals out." If no person or group, whether stockholders or voters, can displace a ruling elite, then such an elite becomes more suitable for a dictatorship than for an allegedly democratic country.”

Rothbard continues with some interesting questions that are extremely pertinent to the subject of the relationship that was intentionally formed between the Government Agency known as the Federal Reserve and the banking industry. In the reaction to the Gonzalez/Frank Bill the New York Times stated in its October 12, 1993 edition: “The Fed is already working behind the scenes to organize battalions of bankers to howl about efforts to politicize the central bank". To that Rothbard responds:

“True enough. But why should these "battalions of bankers" be so eager and willing to mobilize in behalf of the Fed's absolute control of the monetary and banking system? Why should bankers be so ready to defend a federal agency, which controls and regulates them, and virtually determines the operations of the banking system? Shouldn't private banks want to have some sort of check, some curb, upon their lord and master? Why should a regulated and controlled industry be so much in love with the unchecked power of their own FEDERAL CONTROLLER?”

Things to consider, don’t you think? Now while the idea that private banks own the Federal Reserve is horrifying, and a convenient scapegoat that takes the real responsibility off the government to a degree, the fact that our own Federal Government owns it is even more horrifying because it means that this government has perpetrated one of the greatest criminal frauds on the People of this country for the last 97 years.

In my opinion, the truth about the Federal Reserve is worst than the popular myths surrounding it. The system that now oppresses the People of this country cannot hit the bone yard quick enough!

"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun