Wednesday, November 4, 2015

How The Fed Became The Undemocratic, Corrupt & Destructive Force It Is Today..........

How The Fed Became The Undemocratic, Corrupt & Destructive Force It Is Today

Today's Fed critics aren't even aware that the U.S. Central Bank originally had far less power than it does today. As concerned as they were, its early critics could never have imagined how perverted its mandate would become in the subsequent 100 years. A mandate that has now made it the single most powerful and destructive force on planet earth.

History suggests that the only way to rein in the sprawling Federal Reserve is to end its money monopoly and restore the American people's ability to use gold as a competing currency.

The legislative compromise that created the Fed in 1913 recognized that the power to print money, left unchecked, could corrupt both the government and the economy. Accordingly, the Federal Reserve Act created the Federal Reserve System without a centralized balance sheet, a central monetary-policy committee or even a central office.

The Fed's regional banks were prohibited from buying government debt and required to maintain a 40% gold reserve against dollars in circulation. Moreover, each of the reserve banks was obligated to redeem dollars for gold at a fixed price in unlimited amounts.

Over the past century, every one of these constraints has been removed. Today the Fed has a centrally managed balance sheet of over $4 trillion, and is the largest participant in the market for U.S. government bonds. The dollar is no longer fixed to gold, and the IRS assesses a 28% marginal tax on realized gains when gold is used as currency.

The largest increases in the Fed's power have occurred at moments of financial stress. Federal Reserve banks first financed the purchase of government bonds during World War I. The gold-reserve requirement was dramatically reduced and a central monetary policy-committee was created during the Great Depression. President Richard Nixon broke the last link to gold to stave off a run on the dollar in 1971.

This same combination of crisis and expediency played out in 2008 as the Fed bailed out a series of nonbank financial institutions and initiated a massive balance-sheet expansion labeled "quantitative easing." 

To end this cycle, Americans need an alternative to the Fed's money monopoly.

And that, in a nutshell, is how American citizens lost their country and became a nation of debt serfs.

No comments:

Post a Comment