Dirty Secrets of the Temple

by Stephen Lendman

Years ago I read William Greider’s excellent book
published in 1987 on how the US Federal Reserve System
works.  It was detailed and explicit and makes
wonderful and informative reading, except for the
solution he suggests to a huge problem.  His was far
too timid.  This article proposes a much different
one.  Greider called his book Secrets of the Temple
with a sub-title: How the Federal Reserve Runs the
Country.  A better sub-title might have been how the
Fed (and other key central bankers) runs the world.
This article attempts to summarize what it does, how
it does it, for whose benefit and at whose expense.
For those who don’t know, prepare for some stunning
information and commentary.

Let’s be clear at the outset.  The US Federal Reserve,
Bank of England, Bank of Japan and the European
Central Bank (for the 12 European countries that
adopted the single euro currency in 1999) are
institutions with enormous power far beyond what most
people everywhere can imagine.  These most dominant of
all central banks, as well as most others, have a
powerful influence on the financial conditions in
virtually all countries including their own, of
course, in an increasingly borderless financial world
where a significant economic event in one nation can
affect most others for better or worse.

One other powerful bank is also part of today’s
financial world.  It needs mentioning because of its
importance, even though it requires a separate article
to explain how it works more fully.  It’s the
secretive, inviolable and accountable to no one Bank
of International Settlements (BIS) founded in 1930 and
based in Basle, Switzerland.  This bank most people
never heard of is the central banker to its member
central banks - a sort of banking “boss of bosses”
equivalent to what apparently exists in the shadowy
world of Mafia dons.  Like most other central banks,
including the Federal Reserve (explained below), it’s
privately owned by its members. 

It’s believed by some academicians and others who’ve
studied the BIS that the ruling elite of financial
capitalism established this bank of banks to be the
apex of power to exercise authority over a world
financial system owned and controlled by them.  It’s
thought their plan was to use this bank to dominate
the political system of every country and control the
world economy in a feudalistic fashion.  In a word,
the thinking goes that these super-elite want to rule
the world by controlling its money, and they set up
this supranational all-powerful bank of banks to do
it.  As important as that is, that discussion remains
for another time as the intent of this article is to
focus solely on the US Federal Reserve.

The dominant central banks and BIS, together with most
others, wield their influence in cartel-like alliance
with each other to assure they all benefit more than
they otherwise would without such a cozy arrangement.
With their immense power it’s no play on words to say
these financial institutions do indeed rule the world.
Because they’re able to create money, they fund the
needs of their governments, their militaries and all
business activity that couldn’t function without a
ready supply of that most needed of all commodities.
It’s money, not love, that makes the world go round,
and central bankers have the power to create or remove
from circulation as much or little of it as they
choose and for whatever purpose they have in mind.
That kind of power can move mountains or destroy them.

No nation’s central bank is more powerful today than
the US Federal Reserve, but it wasn’t always that way,
and it now has competition for the top spot it hasn’t
known since WW II.  The Fed, as it’s called, has
existed since it was first established by an act of
Congress in 1913.  But the Bank of England has been
around since Britannia ruled the waves beginning in
1694 when King William III needed help funding the
kind of escapade that takes lots of ready cash - war.
Back then it was with France, and the king needed a
friendly banker to print it up for him to help him
fight it.  He also needed financial help to facilitate
trade and manage the country’s debt that always mounts
up when wars are fought.  The Bank of England wasn’t
the first central bank, but it was the modern world’s
first privately owned one in a powerful country.  It
was called the Bank of England to keep the public from
knowing that it, like our Federal Reserve, was and
still is privately owned and not part of the
government.  It was also the model used in the
formation of our own central bank and most others.

The Brits may have had a 219 year head start on the
Fed, but central bankers are only as powerful as the
countries they represent and their economies.  Today
the former dominant Brits must settle for a far lesser
role as being just one of many junior partners to a US
hegemon that emerged post WW II as the world’s
dominant economic power.  It still is today, even
though some credible experts believe this country may
have seen and past its peak and is now in decline.
Some go further and claim our decline has been
accelerated by the disastrous policies of the Bush
administration that irrationally believes waging war
on the world without end is the way to rule it,
promote endless economic growth and dominance, and
thus preserve the nation’s preeminent position as the
reigning economic champion. 

It’s easy to challenge that view and think that champ
has climbed into the ring a few times too many, has
endless plans for more return engagements, and is
likely to meet the same fate many a former human one
did who didn’t know when to quit and ended up with
chronic brain damage known as dementia. The lesson
from history is always the same. The price for
reckless behavior is high, painful and inevitable.
It’s true for countries as well as individuals, but
too often neither one sees it until it’s too late.
The biggest difference between the US today and other
nations in the past that paid dearly for not yielding
when their day had passed is that we have an
all-powerful arsenal others never did.  Should we
decide to use it, there likely wouldn’t be much left
behind for a successor.  Not a pleasant thought, but a
very real one.

It All Began in 1910 On Jekll Island

It sounds like the title of a horror movie, but the
real life events that happened at this privately owned
island off the coast of Georgia in 1910 would have
challenged even the Hollywood bad dream factory to
come up with. 

It was here that seven very rich and powerful men met
in secret for nine days and created the Federal
Reserve System that came into being three years later
on December 23, 1913 by an act of Congress.  Since
that time, the nation and world would never be the
same, but only the rich and powerful were the
beneficiaries.  That was the whole idea, and it worked
as planned.

The Federal Reserve Act that began it all must surely
rank as one of the most disastrous and outrageous
pieces of legislation to the public welfare ever to
come out of any legislative body.  It may have also
have been and still is illegal according to Article 1,
Section 8 of the Constitution which happens to be the
inviolable law of the land.  The article states that
Congress shall have the power to coin (create) money
and regulate the value thereof.  In 1935, the US
Supreme Court ruled the Congress cannot
constitutionally delegate its power to another group
or body.  The Congress thus acted in violation of the
Constitution it’s sworn to uphold and in so doing
created the Federal Reserve System that, as will be
explained below, is a private for-profit corporation
operating at the expense of the public welfare.  By
its action, our lawmakers committed fraud against the
people of the country and so far have gotten away with
it without the public even knowing about the harm
done.

The shameful result is that what should have arrived
stillborn is now the most dominant institution on
earth, and all because of what began on a privately
owned island with a scary name.  But had the Congress
acted responsibly, the act of Fed creation might never
have happened.  The legislation establishing it was so
harmful to the public interest, it likely never would
have passed if it hadn’t been shepherded through a
carefully prepared Congressional Conference Committee
meeting scheduled for between 1:30 - 4:30 AM (when
most members of Congress were asleep) on December 22,
1913.  The Act was then voted on the next day and
passed although many members of the body had left for
the Christmas holidays and most others who stayed
behind hadn’t had time to read it or know its
contents.  Sound familiar?  Still it passed (like a
thief in the night) and was signed into law by an
unwitting or complicit Woodrow Wilson who later
admitted he made a terrible mistake saying “I
unwittingly ruined my country.”  But it was too late
for postmortems, and the American people have paid
dearly ever since.  It’s about time the public
understood that and began to demand an end to over 90
years of damage done.

It almost happened 43 years ago when one president
decided to act on behalf of the people who elected
him. That man was John Kennedy, who before his death
planned to end the Federal Reserve System to eliminate
the national debt a central bank creates by printing
money and loaning it to the government.  That debt has
now risen to over $8,400,000,000,000 ($8.4 trillion)
which every taxpayer must pay for and has done so in
the amount of nearly $174,000,000,000 ($174 billion)
in just the first three months of 2006.  This debt
service is now an annualized amount exceeding
two-thirds of a trillion dollars.  It’s made the
bankers rich (which was the whole idea) and the public
poorer because we’re taxed to pay the tab.  It’s no
exaggeration to call this the greatest financial scam
in world history and one that gets greater every day.

The debt was less onerous 40 years ago, but Kennedy
understood its danger to the country and the burden it
placed on the public.  Thus, on June 4, 1963, he
issued presidential order EO 11110 giving the
president authority to issue currency.  He then
ordered the US Treasury to print over $4 billion worth
of “United States Notes” to replace Federal Reserve
Notes.  He intended to replace them all when enough of
the new currency was in circulation so he could end
the Federal Reserve System and the control it gave the
international bankers over the US government and the
public.  Just months after the Kennedy plan went into
effect, he was assassinated in Dallas in what was
surely a coup d’etat disguised to look otherwise and
may well have been carried out at least in part to
save the Fed System and concentration of power it
created that was so profitable for the powerful
bankers in the country.  Those benefitting from it had
good reason to be involved in the plot to save the
special privilege they weren’t willing to give up
without a fight.  It’s a plausible explanation that
may explain who may have been behind the assassination
and for what reason.  Whatever the truth is, the
banking cartel was only in distress a short time.
Once Lyndon Johnson took office, he rescinded
Kennedy’s presidential order and restored the cartel’s
former power.  It’s kept it ever since and is now, of
course, more powerful than ever.  Even presidents are
unable to stop it and those who would try have a
lesson from history to give them pause.

The predecessors of the possible Kennedy coup plotters
were the men who met on Jekyll Island in 1910. They
represented some of the richest and most powerful men
in the world - the Morgans, Rockefellers, Rothschilds
of Europe (who dominated all European banking by the
mid-1800s and became and still may be the wealthiest
and most powerful family of all) and others of great
influence and power.  Included was a US senator, a
high ranking Treasury official, the president of the
largest bank in the country at the time, a leading
Wall Street figure and the man who would later become
the first chairman of the Federal Reserve System.  It
was quite an assemblage, and they came to accomplish
one thing.  They wanted to change the ideology and
course of American business that up to then was based
on marketplace competition and replace it with
monopoly.  They also knew what Baron M.A. Rothschild
understood when he once said: “Give me control over a
nation’s currency and I care not who makes its laws.”
They knew the wisdom of what’s stated in Proverbs 22:7
as well: “The rich rule over the poor, and the
borrower is servant to the lender.”

This was the dawning of the age of powerful cartels
when the seven financial titans meeting secretly in
the island’s clubhouse decided no longer to compete
with each other and wanted the power to arrange it.
They were already colluding informally but knew it
would all work better under a legally sanctioned
cartel.  They wanted a banking cartel and got one that
flourishes today below the public radar with the tool
they wanted most - the ability to control the nation’s
money supply that gave them almost unlimited power.
The cartel now works cooperatively with their
governments and all other powerful transnational
corporations in a dominant global alliance that allows
them to control the world’s markets, resources, cheap
labor and our lives.

The Federal Reserve System Is Not A Government Agency
- It’s A Privately Owned Cartel of Powerful Banks
Protected By Law

It’s commonly but falsely believed the Federal Reserve
System is a function of government and subject to its
control.  False.  It’s often referred to as a
quasi-governmental, decentralized central bank, but
that’s just cover to disguise what, in fact, it really
is: a privately held and operated cartel made to look
like the government is in charge.  The fact that it’s
headquartered in Washington in the formidable and
impressive-looking Eccles building (named after a
former Fed chairman) is just part of the clever
subterfuge.  Here’s how it works:

The Fed is composed of a Board of Governors in
Washington and 12 regional banks in major cities
throughout the country (including in my own city of
Chicago where anyone once but no longer could walk up
to a teller’s window and buy US Treasury securities).
The system also includes many and various member banks
including all national banks that are required to be
part of the system.  Other banks were also allowed to
join and many did.  The Federal Reserve began
operating in November, 1914, almost one year after the
Congressional act creating the system the previous
year as explained above.  It was mandated by law to
have the greatest power of any institution in the
country - the power to create and control the nation’s
money supply. 

Most people know little or nothing about money and
banking, likely never think about it, and have no idea
how what the Fed and bankers do affect their lives.
Before writing this article, I had little more than
the modest knowledge I learned in a required course on
the subject and basic accounting as part of my MBA
curriculum 46 years ago.  Those courses left out the
most important parts of the story and never hinted at
anything sinister about how the banking system works
in fact.  But no one should ever imagine banks were
established or intended to be run for our benefit.
They surely are not, and anyone suggesting they are
should read on.  They’re about as beneficial to the
public welfare as was the MX Peacekeeper ICBM (the
clever language is impressive) intended to carry
nuclear warheads back in the mid-80s that had the
power to destroy all life on the planet and one day
may do it in its old or updated form.

The Federal Reserve Act of 1913 (the law of the land)
stipulates that the Federal Reserve Banks of each
region are owned by the member banks in it.  These Fed
banks are privately owned corporations that make a
great effort to hide the fact that they, in fact, own
what the public largely thinks is part of the public
treasury and government.  It’s easy to think that as
Fed chairmen and seven of the twelve Governors are
appointed by the President and approved by the Senate.
As such, the FRB is a sort of quasi-government
entity, but the fact is the System is a privately
owned for profit enterprise just like any other
business.  It has stockholders like other public
corporations that are paid 6% risk free interest every
year on their equity holdings.  The public doesn’t
know this, and it likely wouldn’t be good PR if it
found out.  People might be even more upset if they
learned some of the owners of our Federal Reserve are
powerful foreign investors in the UK, France, Germany,
The Netherlands and Italy.  They’re partners with
giant US banks like JP Morgan Chase and Citibank as
well as powerful Wall Street firms like Goldman Sachs
in a new world order banking cartel that influences
and affects business activity everywhere and our
lives.

The issue of private ownership of the Federal Reserve
Banks has been challenged several times in the federal
courts to no avail.  Each time the courts upheld the
current system under which each Federal Reserve Bank
is a separate corporation owned by commercial banks in
its region. One such case was Lewis v. United States
that was decided by the 9th Circuit Court of Appeals
that ruled the Reserve Banks are independent,
privately owned and locally controlled corporations.

Our Founding Fathers Had Different Ideas Than the
Powerful Men who Met on Jekll Island

Throughout our history, there was disagreement over
who should control the power of the nation’s money
supply and the right to issue it.  The Founding
Fathers understood that the British Parliament was
forced to levy unfair taxes on its American colonies
and its own citizens because the Bank of England had
run up so much debt the government needed revenue to
reduce it.  Benjamin Franklin, in fact, believed that
was the real cause of the American Revolution.  Most
of the Founders also understood the danger that could
result from bankers’ accumulating too much wealth and
power.  James Madison, the main drafter of our
Constitution, called them “Money Changers,” referring
to the Bible that said Jesus twice drove the Money
Changers from the Temple in Jerusalem 2,000 years ago.
Madison said:

“History records that the Money Changers have used
every form of abuse, intrigue, deceit and violent
means possible to maintain their control over
governments by controlling money and its issuance.”

Thomas Jefferson was just as strong in his
condemnation when he said:

“I sincerely believe that banking institutions are
more dangerous to our liberties than standing armies.
Already they have raised up a money aristocracy that
has set the government at defiance.  The issuing power
should be taken from the banks and restored to the
people to whom it properly belongs.”

Jefferson and Madison understood the dangers of
commercial monopolies of all types and tried to assure
they never would exist in the new nation.  They, in
fact, wanted two additional amendments added to the
“Bill of Rights” in the Constitution but never got
them.  They believed to protect the liberty of the
people the nation should have “freedom from monopolies
in commerce” (what are now giant corporations
including the big international banks and Wall Street
investment firms) and “freedom from a permanent
military,” or standing armies.  Try to imagine what
the country would be like today if Jefferson and
Madison had gotten their way - a country without giant
predatory corporations exploiting everyone for profit
and without a rampaging military waging war on the
world, threatening to destroy it, and doing it so
those corporate giants could earn even greater
profits.

They never did, of course, and the people have paid
dearly ever since including the great harm caused
because the government relinquished its right to
control the nation’s money supply.  It gave it away
secretly with the public none the wiser, never knowing
how greatly it’s been harmed.  It’s been even worse
since the 1980s because the power of the Fed grew
under a friendly Republican president, and the
corporate media led cheerleading for it hid the
effect.  For them, no public demeaning of it, its
giant member banks or Wall Street allies is allowed. 

Things were especially out of hand during the tenure
of Alan Greenspan - a Fed chairman no one should have
found much reason to cheer either before he headed the
Fed when he was a presidential advisor or during the
time he did.  It was only after his economic
consulting firm failed that he went into government
service likely because he needed a new line of work.
There he managed to become a larger than life seer of
central banking who was elevated to near sainthood by
the business pundits who thought under his tenure the
skies were only blue and the few clouds in sight
always had silver linings.  Now Alan is retired to the
greener pastures of lucrative book contracts and
speaking engagements, which shows when you do your job
well for the rich and powerful (at the expense of the
rest of us) who gave it to you, you’ll be well
rewarded in the end.  It’s likely the new Fed chairman
has taken note and will dutifully try to follow in the
tradition that preceded him. 

But try imagining a different sort of Fed chairman,
one who knew, believed in and practiced the words and
wisdom of another American president of some note -
Abraham Lincoln.  In 1886 Lincoln said the following:
“The money powers prey upon the nation in times of
peace and conspire against it in times of adversity.
It is more despotic than a monarch, more insolent than
autocracy and more selfish than a bureaucracy. It
denounces, as public enemies, all who question its
methods or throw light upon its crimes.  I have two
great enemies, the Southern Army in front of me and
the bankers in the rear.  Of the two, the one at the
rear is my greatest foe.”

Lincoln also appears to have said (although some
dispute it): “I see in the near future a crisis
approaching that unnerves me and causes me to tremble
for the safety of my country…..corporations have
been enthroned and an era of corruption in high places
will follow, and the money power of the country will
endeavor to prolong its reign by working upon the
prejudices of the people until all wealth is
aggregated in a few hands and the Republic is
destroyed.”  Imagine what Lincoln might say today.

Given Lincoln’s sentiment about the bankers and money
power of the country, it would seem to beg the obvious
question: did it play a role in, or was it the reason
for, his untimely death at the hands of John Wilkes
Booth?  The international bankers clearly disliked
Lincoln after he managed to get the Congress to pass
the Legal Tender Act in 1862 that empowered the US
Treasury to issue paper money called “greenbacks.”
Lincoln needed this legislation after he declined to
pay the bankers the usurious 24 - 36% interest rates
they demanded on the loans he needed to fund his war
with the South.  With the new banking law, Lincoln was
then able to print up the millions of dollars he
needed which was debt and interest free.  Clearly this
was not what the greedy bankers wanted as they can
only profit when they get their pound of flesh from
financial transactions they control.  Right after the
war ended Lincoln was assassinated, and shortly
thereafter the so-called Greenback law was rescinded,
a new national banking act was passed, and all money
became interesting-bearing again.

How the Federal Reserve System Works

The Federal Reserve System is the result of the
Congress and President having agreed to privatize the
nation’s money system and relinquish the power that
should have remained the government’s exclusive right.
That act was so outrageous the Fed had to be
deliberately designed to look like a branch of the
federal government to hide the fact that it’s really
an all-powerful privately owned banking cartel whose
member banks (including all the national ones) share
in the vast profits earned from having the most
important of all franchises governments alone should
have - the right to print money in any amount, control
its supply and price, and benefit hugely by loaning it
out for a profit including to the government itself
that must pay interest on the money it should never
have to if it simply printed its own.  Think of what
happened as the government having legalized the right
to counterfeit the national currency for private gain.
It’s no exaggeration to claim this is the greatest
ever of all financial scams causing incomprehensible
harm with the public none the wiser.  Here’s how it
works in simple terms:

The Fed was given the authority to conduct the
nation’s monetary policy with the power to control the
supply and price of money.  It has three ways to do it
- through open market operations, the discount rate it
charges member banks, and the reserve requirement
percentage of member banks assets it requires them to
hold and not loan out.  The Board of Governors is
responsible for handling the discount rate and reserve
requirements while the Federal Open Market Committee
(FOMC) is in charge of the open market operations of
buying or selling bonds explained further below.
Using these tools, the Fed is able to influence the
supply and demand for money and thus directly control
the federal funds short-term rate that’s always fixed
unless the Fed wishes to raise or lower it.  Longer
rates are controlled by the powerful institutional
traders in the bond market.

The FOMC and How It Works

The Federal Open Market Committee is really key to the
whole process of money creation or contraction.  It
consists of 12 members - seven members of the Board of
Fed Governors, the president of the New York Fed Bank
(the most important one of all) and four of the
remaining 11 Reserve Bank presidents who serve one
year terms on a rotating basis.  The FOMC holds eight
regularly scheduled meetings a year to assess economic
conditions and decide how loose or tight it wants
monetary policy to be to further its stated goal of
sustainable economic growth and price stability.

The FOMC literally has the power to create money out
of nothing.  It does it in a four step process:

Step 1 - The FOMC first approves the purchase of US
government bonds on the open market.

Step 2 - The New York Fed bank buys them from sellers
(financial markets always have an equal number of
buyers and sellers).

Step 3 - The Fed pays for its purchases with
electronic credits to the sellers’ banks, which, in
turn, credit the sellers’ bank accounts.  These
credits are literally created out of nothing.

Step 4 - The banks receiving the credits can then use
them as reserves to enable them to loan out as much as
10 times their amount (if their reserve requirement is
10%) through the magic (only banks have) of fractional
reserve banking and, of course, collect interest on
all of it.  What a business, and it’s all legal.
Imagine how rich we might all be if we as private
individuals could do the same thing.  Borrow a million
from the Fed and like magic it becomes 10 times as
much, and we get to collect interest on all but the
10% of it we must hold in reserve.  This is the magic
of fractional reserve banking money creation and
explains how powerful an economic stimulus it is when
the Fed wants to enhance economic growth.

When the Fed wishes to contract the economy by
reducing the money supply, it simply reverses the
above process.  Instead of buying bonds, it sells them
so that money moves out of the buyers’ bank accounts
instead of into them.  Bank loans must then be reduced
by 10 times if the reserve requirement is 10%.

How the Fed Harms the Public Interest

The Federal Reserve System exists only to serve its
owners and member banks and in doing so is hostile to
the public interest.  That’s because it’s a banking
cartel with the power to restrict competition for
greater profits gained at our expense.  It goes from
our pockets to theirs, and the public loses in at
least four ways:

One - Through the invisible tax of inflation that
results from the dilution of purchasing power caused
by newly created money entering the system reducing
the value of dollars already there.  The Greenspan Fed
was especially expansive, never was held to account
for its excess and was able to pass a serious problem
it created on to a future Fed chairman and society to
deal with.  The man we now lionize as a monetary
magician began sensibly.  From 1982, before he arrived
in 1987, until 1992, the money supply increased on
average by 8% a year.  But from 1992 - 2002, the
printing press worked overtime in sync with the
deregulation and growth of global markets expanding
the currency by more than 12% a year.  It became even
more extreme post 9/11 and since 2002 grew at a 15%
rate.  It now has more than doubled in less than a
decade.  It appears that the new Fed chairman has
taken note and has begun reducing the rate of money
expansion as he continues raising the federal funds
rate to whatever level he has in mind.

Currency traders as well apparently have taken note of
the rate of money supply expansion overall.  Except
for a respite in 2005, it’s quite likely the dollar
weakness since 2002 is the result of the excess amount
of them created for the Bush administration’s
profligate spending to fund its endless wars and
reckless tax cuts for the rich.  The problem is
further compounded as from 1964 to the present debt
service has grown from 9% to 16.5% of the federal
budget and rising; the current account deficit has
gone from a 1% surplus to an almost 7% deficit; and
federal indebtedness has grown by 40% just since 2001
and financed in large part by “the kindness of
(foreign) strangers” that may be growing restive.
Furthermore, since March, 2006, the Fed stopped
publishing the M-3 aggregate of the total amount of
dollars in circulation.  With that transparency gone,
big buyers of US Treasuries now have to calculate the
value of the dollar based on speculation and
uncertainty rather than hard data - not a way to
inspire trust in the financial markets that function
best in an atmosphere of openness and clarity.

Two - The public also loses because the banking cartel
is able to practice usury - from it’s power over a
flexible currency to artificially move rates up or
down to any level it chooses which many small lenders
in a truly free and open market can’t do.  In
addition, the cartel’s market dominance forces most
borrowers (especially smaller ones less able to issue
their own debt instruments) to come to them for loans
which it’s then able to make using what should be the
peoples’ money available to them at the lowest
possible cost from many highly government regulated
small lenders competing for customers. 

Three -  Through the taxes, we, the public, must pay
to cover the interest on the huge national debt (now
over $8.4 trillion) accumulated from the money the Fed
printed and loaned to the government.  As mentioned
earlier, that now totals an annualized amount
exceeding two-thirds of a trillion dollars and
increasing daily.  It’s made the bankers rich,
ordinary people poorer, and the public none the wiser
it’s been fleeced big time.

Four -  Compounding the above abuse, the cartel is
able to get the public to bail out the system with
more of its tax dollars.  It happens whenever any of
the too-big-to-fail banks need financial help to
survive.  The same is true for big corporations like
Chrysler or Lockheed, large investment firms or hedge
funds like Long-Term Capital Management or even
countries like Mexico.  It’s also true when a single
bank goes out of business and depositors must be
compensated or more seriously in the wake of a
systemic financial meltdown like the one that wiped
out many savings and loan banks in the 1980s.  Whether
it’s a single bank or many dozens at a time, public
tax dollars are used to save the system or just pick
up the tab to repay depositors insured against losses
through government insurance protection up to a
stipulated amount per account.

How Would Adam Smith Have Reacted to the Federal
Reserve System

This concentration of banking cartel wealth and power
is the opposite of what Adam Smith, the ideological
godfather of free market capitalism, advocated in his
writings including his seminal work The Wealth of
Nations.  Smith wrote about an “invisible hand” that
he said worked best in a free market with many small
businesses competing locally against each other.  He
strongly opposed the concentrated mercantilism of his
day (what there was of it) which now would be the
equivalent of today’s giant transnational corporations
and the banking cartel with the power to restrict
competition, maintain higher prices than otherwise
possible and earn greater profits as a result at the
public’s expense. 

The kind of banking cartel that exists today is
precisely what Smith would have condemned.  But having
a central bank is not in itself a bad thing provided
the bank is government owned, controlled and operated
for the public welfare.  There’s only a problem when
through subterfuge the bank is set up to appear
government owned and run but is, in fact, for private
profit the way ours is and most others as well.  And
in the US, to make the arrangement work, a mostly
publicly appointed governing authority runs the System
acting as a shill for its private for-profit banking
cartel members that wanted it in the first place and
got a corrupted Congress to give it to them.  To work,
the cartel needs the cover it gets from its
partnership with government, but it’s through that
arrangement that it harms the public interest for its
own private gain.

And that goes to the heart of the problem: that the
Congress elected to serve the people instead betrayed
them by creating an all-powerful banking cartel and
gave it the authority to practice fractional reserve
banking with the power to get free money by creating
it out of nothing.  It then allowed its members a
near-monopoly right to set the rates of interest they
wish to charge borrowers. The whole process amounts to
a legally sanctioned heist by the powerful banks
working in league with government for its own gain.
It’s also part of a more extensive government arranged
process to transfer wealth from the people to the
pockets of large corporations and the rich and doing
it while those being harmed are unaware it’s even
happening.

Another Way the Federal Reserve System Harms the
Public

The Fed harms the public welfare in one other
important way, and again most people are none the
wiser about it.  Supposedly the Federal Reserve System
was established to stabilize the economy, smooth out
the business cycle, maintain a healthy rate of
sustainable growth while holding prices steady and
benefitting everyone.  So how well has it done its
job?  Since its creation in 1913, and with them in
charge, we had the crashes of 1921 and the most
important and remembered one in 1929.  That was
followed by The Great Depression that lasted until the
onset of WW II that noted conservative economist
Milton Friedman explained was caused and exacerbated
because the Federal Reserve oddly decided to reduce
the money supply at a time of economic contraction
instead of increasing it.  We then had recessions in
1953, 1957, 1969, 1975, 1981, 1990 and 2001.  We also
had inflation beginning in the 1960s which became
quite severe through much of the 1970s and early
1980s.  And we had a major banking crisis in the 1980s
at which time more banks and savings and loan
associations failed than ever before in our history.
It happened in the wake of financial market
deregulation when banks were allowed to pursue their
own interests without government oversight to check
their willingness to assume excess risk or stop them
from trying to get away with deliberate fraud.

Along with the economic stability the Fed never
achieved, we’ve also had soaring consumer debt; record
high federal budget and trade deficits; a high level
of personal bankruptcies and rising mortgage loan
delinquencies; interest on a mounting national debt
that’s a large and rising percentage of the federal
budget; the loss of our manufacturing base and it’s
high-paying jobs with good benefits because they’re
being exported to low wage countries; an economy in
which services now account for nearly 80% of all
business that provide mostly lower paying, less
skilled jobs with few or no benefits; and a widening
income and wealth gap that continues to harm lower and
middle income earners to benefit the rich and well-off
privileged few and a government that encourages it.

Sum it all up and the conclusion is clear.  The one
thing the Fed failed to accomplish above all else was
what it was established to do in the first place.  But
it’s much worse than that if we understand a cartel’s
real motives.  It’s not to serve the public interest.
It’s to abuse it because that’s how it benefits most.
It’s able to do it with its legally sanctioned
concentrated power and a friendly government in league
with it as partners or facilitators.  It’s from that
cozy hidden from view arrangement that it’s able to
get away with the grandest of grand thefts.

A Needed Solution to A Huge Problem

From the information presented above, it’s clear that
the Federal Reserve System was established through
stealth and deceit by a handful of corrupted
politicians in service to their powerful banking and
Wall Street allies.  They did it to defraud the public
and without them being any the wiser about what, in
fact, had been done or how harmful it was to be to
their welfare and interests.  Those in the Congress
and President Wilson (a man trained in the law,
one-time practicing attorney, former esteemed academic
and president of Princeton University) either knew or
should have known that the act he and they approved
establishing the Fed was in direct violation of the
Constitution they were sworn to uphold. They didn’t,
they broke the law, and the public paid dearly for
their crime ever since to this day.

So what recourse is left, and can people be mobilized
to pursue it.  There’s only one sensible and just
solution to undo the damage done to so many for so
long - abolish the Federal Reserve System and restore
the power it now has to the federal government working
for the public welfare.  Take it back from the
powerful banking cartel working against it and never
allow it to be in its hands again.  That alone is the
only way.  The great German poet and playwright
Bertolt Brecht would have agreed and once said it was
“easier to rob by setting up a bank than by holding up
(one).” 

Freeing us from the these powerful “Money Changers”
would have enormous benefits for everyone.  It would
establish a prudent policy of money creation that
would minimize our most unfair tax - inflation which
is caused by private for-profit bankers manipulating
the nation’s money supply to enhance their profits.
It would stabilize the economy and smooth out the
extremes in the business cycle exacerbated by the
cartel working for its benefit and against ours.  It
would lower the cost of money for borrowers because it
would end the monopoly power the cartel now has to set
the rates it chooses by opening the market to more
competition.  It would reduce the growing and
oppressive national debt freed eventually from the
extra money supply growth needed to pay it off.  It
would lower the public’s tax burden as less revenue
would be needed for debt service.  It would be a
momentous step toward reducing and hopefully one day
eliminating the overwhelming power of all predatory
corporate giants preying on us so they can grow and
prosper.  It might even discourage wars which are only
fought for wealth and power - never for glory or to
make the world safe for democracy or other false
motives.  Without a powerful corporate banking cartel
and other industry giants that feed on the human
misery they create, there would be less of a reason to
pursue any.  Try to imagine that kind of world and a
government working for the public welfare instead of
harming it as it now must do in service to capital.
That world is possible, and responsible people need to
work for it as the one we now have has failed and must
be changed before it’s too late.

A View of the World Created by the Interests of
Capital and Our Government That Supports It

It’s the ugly, corrupted world of neoliberal “free
market” capitalism controlled by giant corporations;
that benefits the privileged few alone causing great
human misery and despair; a despotic world that can’t
endure nor must we allow it to much longer; one with
endless wars for power and profit; where people are
commodities to be used as needed and discarded like
trash when they’re not; with no concern for preserving
an ecology able to sustain us and won’t much longer
because we’re destroying it and ourselves for profit;
where essential human needs don’t matter under an
economic model only valuing private gain; where
democracy is incompatible with predatory capitalism;
one no one should want to live in or ever have to; one
we must change or perish.  In the language of capital,
that’s the bottom line.  Only a mass movement of
committed people can change that world.  It must or we
all will. 

Unless we can move from our failed economic model to a
better alternative, it will end on its own one day by
one means or other.  But it may be a denouement no one
would wish for - it’s own self-destruction taking all
else with it either by nuclear holocaust or an
environment so inhospitable it won’t support our
ability to live in it.  Our only chance is to work for
change while there’s still time.

A Vision of A Different Kind of World

History proves a better world is possible when
committed people work hard enough for it.  It’s how
slavery was ended; workers won the right to organize
and bargain collectively; women gained equal suffrage
to men, control of their own bodies, and more rights
and status in the work force; blacks and other
minorities won important civil rights; and politicians
once enacted important social legislation if only out
of fear of what might happen if they didn’t. 

Thomas Jefferson explained the “The price of liberty
is eternal vigilance.”  It’s also the price to keep
our hard won social gains.  For the past generation
those gains have eroded while we weren’t paying
attention and only mass people action can regain them.
The goal should be for a world of caring and sharing;
where peoples’ lives improve because we all work
together for it; one at peace and not with endless
wars to benefit the rich and powerful at our expense;
where all essential human needs are met because
governments work for the common good to assure it;
with real participatory democracy where the public and
elected officials work together to keep it strong and
vibrant; with no oppressive corporate giants or
banking cartels because the law won’t allow any; where
ecological nurturing and preservation are central;
with clean air, water and soil and food that’s fit and
safe to eat; a much simpler world, more locally based
than today’s where notions like globalization aren’t
even in the vocabulary; one based on social equity and
justice for all with government, law enforcement and
the courts working to assure it stays that way; one we
all want to live in and hope some day we can; one we
want to pass on to future generations; one we can’t
afford not to have because the alternative may be no
world at all. 

We may now be at a key watershed moment where our fate
hangs in the balance.  We can either work together for
a better, sustainable world or likely become the first
species in it ever to destroy itself.  If it happens,
we’ll likely take most others with us and not leave
much behind for the few hearty ones that remain.  We
no longer have the luxury of debate for the kind of
world we need to survive.  The giant banks and
corporations won’t give it to us nor will a hostile
government allied with them.  It’s up to us to go for
it or likely perish if we fail.  A good beginning
would be by driving the Federal Reserve “money
changers” out of our temple and the corporate giants
with them.  A better world is possible if we remember
and live by political theorist Antonio Gramsci’s
inspirational words about “the optimism of the will.”
With it, organized people can find a way to beat
organized money.

Stephen Lendman lives in Chicago and can be reached at
.(JavaScript must be enabled to view this email address)  Also visit his blog
site at sjlendman.blogspot.com