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-- The Secret Criminal Society of the Federal Reserve
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Originally posted by Q5echo Demagoguery? i used YOUR link to wikipedia almost verbatim. YOUR link provided everything i knew about the man up until that moment. keep worshiping him. i could care less. but be prepared to be faulted utterly, defending him.

You obviously don't understand the meaning of the word so here, I'll post the definition for you:

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Demagoguery Definition: [n] impassioned appeals to the prejudices and emotions of the populace

So what else were you doing, then? You didn't exactly appear to be evincing praise.

And is it just me or has the level of hostility on this board gone up quite considerably as of late?

I better start posting more

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Originally posted by Trancer-X I better start posting more

go right ahead.

i see that it somehow gives you redemption. how pathetic is that?

fine. postwhore all you want.

just remember i used your link to demagogue that nut.

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Originally posted by Trancer-X Those elite bankers couldn't possibly have a little more sway in the scholastic community than they do, could they? It would be fitting if that man (or his department) was rewarded with a large grant or a private endowment after that POS was published.

...

Is this serious? Charles Beard and Frederick Jackson Turner (who wrote a similar analysis) are considered cornerstones of modern American political theory. They're two of the most respected theorists in the field. And in case you don't understand its meaning, the word "radical" here does not refer to your political views, it refers to a revolutionary new way of approaching constitutional history. At least, it was revolutionary in 1913, when Beard wrote that article.

Misleading authority? Just because you haven't heard of him he must not be an authority, right? I mean, it's not like you just exposed yourself as a complete novice in this field.

quote:

Originally posted by Trancer-X

And for God's sake, are you quoting Jesse Helms as an authority figure?!?! Talk about the pot calling the snowball black.

Though I'm sure you're now going to argue that the State Department and Council on Foreign Relations, along with the mythical Trilateral Commission, succeeded in the fusion of Soviet and Western economies...

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Originally posted by Trancer-X I'd say we have two choices a propaganda technique: or a logical fallacy: A little about Mr. Beard: Those elite bankers couldn't possibly have a little more sway in the scholastic community than they do, could they? It would be fitting if that man (or his department) was rewarded with a large grant or a private endowment after that POS was published.

Actually, I just reread what you wrote (because I was so confused by its appalling lack of logic), and I decided that you are the one who could use a lesson in flawed logic.

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Ignoratio elenchi (also known as irrelevant conclusion or irrelevant thesis) is the formal fallacy of presenting an argument that may in itself be valid, but doesn't address the issue in question. "Ignoratio elenchi" can be roughly translated by ignorance of refutation, that is, ignorance of what a refutation is.

Charles Beard in the pocket of corporate sponsors? I suggest you bring some proof of your wild assertion to bear before anyone takes you seriously. And the part of his bio that you highlighted serves to show his relative IMPORTANCE and LEGITIMACY as a source, so laugh it up all you want, but I think you just owned yourself.

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Originally posted by Lebezniatnikov Is this serious? Charles Beard and Frederick Jackson Turner (who wrote a similar analysis) are considered cornerstones of modern American political theory. They're two of the most respected theorists in the field. And in case you don't understand its meaning, the word "radical" here does not refer to your political views, it refers to a revolutionary new way of approaching constitutional history. At least, it was revolutionary in 1913, when Beard wrote that article. Misleading authority? Just because you haven't heard of him he must not be an authority, right? I mean, it's not like you just exposed yourself as a complete novice in this field.

I think you're missing the whole point.

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And for God's sake, are you quoting Jesse Helms as an authority figure?!?! Talk about the pot calling the snowball black. Though I'm sure you're now going to argue that the State Department and Council on Foreign Relations, along with the mythical Trilateral Commission, succeeded in the fusion of Soviet and Western economies...

If someone handed you a dot to dot drawing book that was somehow (however cryptically) also a street map that lead to the truth, would you just throw it away because it also contained a picture of Jesse Helms in it?

It's funny to see so many people believe the lies that come out of this current adminstration but when someone speaks about something that you don't want to hear, something that falls outside of your (however narrowly definied) scope of reason, they're instantly vilified.

I've studied this for so many hours that when I hear something that seems like it might compliment the rest of the puzzle I instantly begin to try and see if it might fit. Jesse Helms statement definitely adheres to the rest of what is happening, or at least it correlates to what Norman Dodd was saying [[ LINK REMOVED ]]
. But of course you don't know any of the background to this. You're just another person who likes to talk out of their ass.

quote:

Originally posted by Lebezniatnikov Actually, I just reread what you wrote (because I was so confused by its appalling lack of logic), and I decided that you are the one who could use a lesson in flawed logic. Charles Beard in the pocket of corporate sponsors? I suggest you bring some proof of your wild assertion to bear before anyone takes you seriously. And the part of his bio that you highlighted serves to show his relative IMPORTANCE and LEGITIMACY as a source, so laugh it up all you want, but I think you just owned yourself.

I think that many historians are.

It's another way to control us and it's just one of many points that Norman Dodd touched upon in this video:

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Originally posted by Trancer-X I think you're missing the whole point.

Enlighten me then.

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It's funny to see so many people believe the lies that come out of this current adminstration but when someone speaks about something that you don't want to hear, something that falls outside of your (however narrowly definied) scope of reason, they're instantly vilified.

This is almost funny coming from the person who just blindly tore down the argument of a turn of the century historian for "probably being in the pocket of corporate interests." If you don't want to debate the merits of the argument, fine, keep living in a hypocritical world where it's ok to belittle opposing sources, but a crime to belittle yours.

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But of course you don't know any of the background to this. You're just another person who likes to talk out of their ass.

What in the world are you talking about? What is "this" referring to? Global governance? The Soviets? Or the Constitution, which is what my post was originally about. You conflate so many arguments that I can't even remember what the hell your point is.

quote:

Originally posted by Lebezniatnikov Enlighten me then.

Here, I'll highlight the important bits

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his radical re-evaluation of the Founding Fathers of the United States, whom he believed were more motivated by economics than by philosophical principles.

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This is almost funny coming from the person who just blindly tore down the argument of a turn of the century historian for "probably being in the pocket of corporate interests." If you don't want to debate the merits of the argument, fine, keep living in a hypocritical world where it's ok to belittle opposing sources, but a crime to belittle yours.

Well, what better way to control history than to have a stable of historians at your command?

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Who controls the past, controls the future. Who controls the present, controls the past. - Orwell

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Originally posted by Trancer-X Here, I'll highlight the important bits

First of all, I imagine you got his bio from wiki, which makes it amusing that you are going to pick apart the wording. Second, are you at all familiar with academia? For someone who claims with such arrogance that you are open-minded, you are against the concept of re-evaluating norms? Your disdain reeks of hypocrisy.

Political philosophy is about assertion. There are no empirical facts to prove. Therefore, the statement that Beard "believed" something to be true is quite valid. Especially since his belief concerns motivations, which are not exactly verified by anything other than personal capacity for logic.

I still don't see how you have a point here.

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Well, what better way to control history than to have a stable of historians at your command?

So now you are arguing that he is being controlled. By whom? And how? Continuing to supply no evidence isn't making this argument any stronger. Base assertions and anecdotal quotes (all from tried and true unbiased opinions that live up to your high standards of validity I'm sure) don't do anything to disguise the fact that you haven't provided one bit of information suggesting Beard's conclusions were derived from corporate sponsors. Which doesn't even make sense, since Beard is actually pretty critical of the role of commerce in political philosophy.

If you have a point, please come out and make it. I can't deal with these half-assertions and vaguaries.

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Originally posted by Trancer-X Yes, keep following that herd. No, that's not a cliff they're going over, it's more like a big, fun, basejumping platform! Wooo hooo! Oh no, don't worry about not having a parachute yet because we promise that we'll give it to you before you get to the bottom. What, don't you trust us? You saw how ready and eager we were to help everyone in the aftermath of Hurricane Katrina, didn't you? What a freaking joke.

In no way during that entire attempt at personal slander do you even make an effort to address the points I brought up (all of which are taught in nearly every economics department at colleges around the country). That is a "freaking joke."

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Originally posted by kush paintings The system was put into place after banks were repeatedly making poor investments and were simply unable and unwilling to pay depositors their money when time came to withdraw. Without a Federal Reserve, the incidents of September 11 would have triggered a stock market panic, just as it did, investors would have wanted to pull their money out of the market and the economy as a whole (banks included). Because of the sudden rush of depositors attempting to withdraw their money from the banks, and because the banks have their own investments tied up in the market, they are unable to pay all of these investors at once. The market becomes illiquid and chaos is about to ensue. However, because the Fed does exist, it was able to provide discount loans to these banks and also provide liquidity to the stock market, there was no doomsday situation. There was no complete collapse of the stock market. Everyday people with money in the bank did not loose all their money as they did in the Great Depression. Life went on with little more than a hiccup. You take away the Fed, you loose that safety net. Try studying the reason things exist before you call for their annihilation.

Don't assume I advocate no central banking authority. I just want that central bank to be a national bank. Not a private system, and it is private! If it was governmental, then they'de be subject to audits. As I can recall, the Fed has NEVER been audited. The US gold reserve has is not being audited. This is a private institution. They are not publicly traded, and so don't have to release ownership, audits, meetings, etc..

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Originally posted by Krypton Don't assume I advocate no central banking authority. I just want that central bank to be a national bank. Not a private system, and it is private! If it was governmental, then they'de be subject to audits. As I can recall, the Fed has NEVER been audited. The US gold reserve has is not being audited. This is a private institution. They are not publicly traded, and so don't have to release ownership, audits, meetings, etc..

I agree that an increase in transparency would be great, but Congress is in control of that. The Fed is not strictly a private institution, nor is it strictly a government institution. The 12 Federal Banks that make of the Federal Reserve system function far more like private institutions than government ones. However, the president(s) does appoint the Board of Governors and the Senate must approve the appointment (when those spots need to be filled). The Board of Governors hold a majority vote (7 of them against 5 selected Federal Bank Presidents) on the Fed's open market operations, which is one of the two tools the Fed has in influencing the economy (the other being printing money/ currency in circulation). Congress also has the right to oversee the Federal Reserve and make any changes to the system they deem necessary.

If the Fed solely became a government institution, there runs the risk of a political party in control influencing the economy for its own needs rather than the public good. Because the Board of Governors hold extremely long terms after they are brought in by the president (14 years), they are not swayed by producing short-term results in the economy (and perhaps cause harmful long-term effects) in order to increase their chance of remaining in power.

The Fed is by no means a perfect institution, but I have yet to see a clear and well thought out proposal that would work better.

quote:

Originally posted by kush paintings I agree that an increase in transparency would be great, but Congress is in control of that. The Fed is not strictly a private institution, nor is it strictly a government institution. The 12 Federal Banks that make of the Federal Reserve system function far more like private institutions than government ones. However, the president(s) does appoint the Board of Governors and the Senate must approve the appointment (when those spots need to be filled). The Board of Governors hold a majority vote (7 of them against 5 selected Federal Bank Presidents) on the Fed's open market operations, which is one of the two tools the Fed has in influencing the economy (the other being printing money/ currency in circulation). Congress also has the right to oversee the Federal Reserve and make any changes to the system they deem necessary. If the Fed solely became a government institution, there runs the risk of a political party in control influencing the economy for its own needs rather than the public good. Because the Board of Governors hold extremely long terms after they are brought in by the president (14 years), they are not swayed by producing short-term results in the economy (and perhaps cause harmful long-term effects) in order to increase their chance of remaining in power. The Fed is by no means a perfect institution, but I have yet to see a clear and well thought out proposal that would work better.

I wonder. Who chooses the candidates to be selected for appointment as a governer? It sure isn't the president or senate...

I understand the need for an independent central bank, but that central bank should not be in the control of private bankers. The Federal Reserve needs to be nationalized and OWNED by the government.

Abraham Lincoln also said that the central bank should be a nationalized entity... "The government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the government and the buying power of consumers. By adoption of these principles, the taxpayers will be saved immense sums of interest."

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Originally posted by kush paintings In no way during that entire attempt at personal slander do you even make an effort to address the points I brought up (all of which are taught in nearly every economics department at colleges around the country). That is a "freaking joke."

I really wasn't even trying to as I've provided more than enough material to back my claims. You people just don't seem all that interested in reading it.

And actually, the joke is how one of my good friends brought up the subject to his econonomics professor a couple of years ago and was basically told the same hackneyed line of, "the Federal Reserve is a government entity. Don't listen to all those conspiracies." but when pressed on it he couldn't provide for anything that actually showed that to be true. Far from it. In turn, my friend provided pages of written court testimony, legal documents, etc. which proved quite the contrary. He said that professor never looked at him the same again, like he had stolen his childlike innocence or something.

Anyway, doesn't anyone ever wonder why the Federal Reserve is listed in the business pages as opposed to the government pages of your local phone book?

Here's mine:

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Originally posted by kush paintings However, the president(s) does appoint the Board of Governors and the Senate must approve the appointment (when those spots need to be filled). The Board of Governors hold a majority vote (7 of them against 5 selected Federal Bank Presidents) on the Fed's open market operations, which is one of the two tools the Fed has in influencing the economy (the other being printing money/ currency in circulation).

Let's get this straight right now because I see a lot of people using this as a claim that the president actually has some power over the Fed through his appoinment of the BoG.

Our President IS GIVEN A LIST OF CANDIDATES to CHOOSE FROM in order to make his appoinment. The Federal Reserve board PROVIDES HIM with this list of proposed candidates so that he may choose among them. He can't just appoint anyone that he wants. He has to choose from one of their PRESELECTED candidates.

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Originally posted by Trancer-X Let's get this straight right now because I see a lot of people using this as a claim that the president actually has some power over the Fed through his appoinment of the BoG. Our President IS GIVEN A LIST OF CANDIDATES to CHOOSE FROM in order to make his appoinment. The Federal Reserve board PROVIDES HIM with this list of proposed candidates so that he may choose among them. He can't just appoint anyone that he wants. He has to choose from one of their PRESELECTED candidates.

wrong. the president can choose whomever he wants. its just standard practice to appoint someone whom the board has pre-selected. there is nothing to stop the president choosing any candidate, pre-selected by the board or not

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Originally posted by pkcRAISTLIN wrong. the president can choose whomever he wants. its just standard practice to appoint someone whom the board has pre-selected. there is nothing to stop the president choosing any candidate, pre-selected by the board or not

Where did you read this?

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Originally posted by kush paintings I agree that an increase in transparency would be great, but Congress is in control of that.

Following the passage of the Federal Reserve Act, Congress attempted to claim exclusive control over the management of monetary policy. It asserted that this was the proper function of Congress, as the constitutionally appointed keeper of the nation's purse. The Banking Act of 1935 curbed Congress's claims by increasing the power of the executive branch's appointees to the board. In the 1970s the Humphrey Hawkins Act (Pub. L. No. 95-253, 15 U.S.C.A. � 3101 et seq.) reformed the Federal Reserve to require biannual congressional oversight hearings on monetary policy and the decisions of the board. Reports on these hearings are presented to Congress by the chair of the board of governors.

Source: West's Encyclopedia of American Law, published by Thomson Gale

http://www.youtube.com/watch?v=iYZM58dulPE

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Thomas Jefferson and Andrew Jackson understood "The Monster". But to most Americans today, Federal Reserve is just a name on the dollar bill. They have no idea of what the central bank does to the economy, or to their own economic lives; of how and why it was founded and operates; or of the sound money and banking that could end the statism, inflation, and business cycles that the Fed generates. Dedicated to Murray N. Rothbard, steeped in American history and Austrian economics, and featuring Ron Paul, Joseph Salerno, Hans Hoppe, and Lew Rockwell, this extraordinary new film is the clearest, most compelling explanation ever offered of the Fed, and why curbing it must be our first priority. Alan Greenspan is not, we're told, happy about this 42-minute blockbuster. Watch it, and you'll understand why. This is economics and history as they are meant to be: fascinating, informative, and motivating.

Here's a good clip from investigative journalist Daniel Hopsicker's
Masters of the Universe - The Secret Birth Of The Federal Reserve:





And another one from Aaron Russo's [[ LINK REMOVED ]]
:

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Originally posted by Krypton How about Chapter 1, section 6? It talks about the secret meeting of international bankers on Jekyll Island. Specifically, they wanted to create the Federal Reserve so that they could control the issuance of money. The initial goal was to get support from Congress to enact that power for them. And Senator Aldrich was the man to bring all the right people together to get that job done. Unfortunately for them, the constitution gives only Congress the power to issue currency and coin. So why does Congress cede this power, and thus cede checks and balances, to a private bank? Additionally, all this was done in secret! Why the secrecy? My answer is because they knew it was unconstitutional, but did not care. They have never cared. As Napoleon Bonaparte reflected on his relationship with financiers, "The hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency: their sole object is gain." I have had the liberty to experience the same greed that all bankers have. That greed is the profit motive. But unlike these powerful men, I have my ethical limits, and I seek not to usurp the constitution with my profit motives. -------------------------------------------------------------- Federal Reserve proposal was unconstitutional from its inception, because the Federal Reserve System was to be a bank of issue. Article 1, Sec. 8, Par. 5 of the Constitution expressly charges Congress with "the power to coin money and regulate the value thereof.". Warburg�s plan would deprive Congress of its sovereignty, and the systems of checks and balances of power set up by Thomas Jefferson in the Constitution would now be destroyed. Administrators of the proposed system would control the nation�s money and credit, and would themselves be approved by the executive department of the government. The judicial department (the Supreme Court, etc.) was already virtually controlled by the executive department through presidential appointment to the bench. Paul Warburg later wrote a massive exposition of his plan, The Federal Reserve System, Its Origin and Growth7 of some 1750 pages, but the name "Jekyll Island" appears nowhere in this text. He does state (Vol. 1, p. 58): "But then the conference closed, after a week of earnest deliberation, the rough draft of what later became the Aldrich Bill had been agreed upon, and a plan had been outlined which provided for a �National Reserve Association,� meaning a central reserve organization with an elastic note issue based on gold and commercial paper." On page 60, Warburg writes, "The results of the conference were entirely confidential. Even the fact there had been a meeting was not permitted to become public." He adds in a footnote, "Though eighteen [sic] years have since gone by, I do not feel free to give a description of this most interesting conference concerning which Senator Aldrich pledged all participants to secrecy." ----------------------------------------------------------

Sure ...

On the Georgian resort hideaway of Jekyll Island (which has some excellent golf courses, by the way), there once met a coalition of Wall Street bankers and U.S. senators. This secret 1910 meeting had a sinister purpose, the conspiracy theorists say. The bankers wanted to establish a new central bank under the direct control of New York's financial elite. Such a plan would give the Wall Street bankers near total control of the financial system and allow them to manipulate it for their personal gain.
G. Edward Griffin lays out this conspiratorial version of history in his book The Creature from Jekyll Island. His amateurish take on history is highly suspect, however. Gerry Rough, in a series of well- researched essays on U.S. banking history, reveals many historical inaccuracies, inconsistencies, and even contradictions in Griffin's book and others of its genre. Instead of reproducing Rough's work here, I offer the reader a substantially more accurate view of the events leading up to the creation of the Federal Reserve System in 1913. To get a proper historical perspective, the story of begins just prior to the Civil War...

The National Banking Acts of 1863 & 1864

Prior to the Civil war there were thousands of banks in operation throughout the Union, all of them chartered, that is, licensed by the state governments. Banking regulations were virtually nonexistent. The federal government had no meaningful controls on banking practices, and state regulations were spotty and poorly enforced at best. Economic historians call the era leading up to the Civil War as the 'state banking era' or the 'free banking era.'

The problems with state banking were numerous, but three were conspicuous. First, the nation had no unified currency. State banks issued their own bank notes as currency, a system which at worst invited severe bouts of counterfeiting and at best introduced additional uncertainty in the task of determining the relative value of each bank note. Second, with no mitigating influence on the issuance of bank notes, the money supply and the price level were highly unstable, introducing and perhaps causing additional volatility in the business cycle. This was due in part to the fact that bank note issuance was frequently tied to the market value of the bank's bond portfolio which they were required to have by law. Third, frequent bank runs resulted in substantial depositor losses and severe crises of confidence in the payments system.5

The National Banking Acts of 1863 and 1864 were attempts to assert some degree of federal control over the banking system without the formation of another central bank. The Act had three primary purposes: (1) create a system of national banks, (2) to create a uniform national currency, and (3) to create an active secondary market for Treasury securities to help finance the Civil War (for the Union�s side).5

The first provision of the Acts was to allow for the incorporation of national banks. These banks were essentially the same as state banks, except national banks received their charter from the federal government and not a state government. This arrangement gave the federal government regulatory jurisdiction over the national banks it created, whereas it asserted no control over state-chartered banks. National banks had higher capital requirements and higher reserve requirements than their state bank counterparts. To improve liquidity and safety they were restricted from making real estate loans and could not lend to any single person an amount exceeding ten percent of the bank's capital. The National Banking Acts also created under the Treasury Department the office of Comptroller of the Currency. The duties of the office were to inspect the books of the national banks to insure compliance with the above regulations, to hold Treasury securities deposited there by national banks, and, via the Bureau of Engraving, to design and print all national banknotes.5

The second goal of the National Banking Acts was to create a uniform national currency. Rather than have several hundred, or several thousand, forms of currency circulating in the states, conducting transactions could be greatly simplified if there were a uniform currency. To achieve this all national banks were required to accept at par the bank notes of other national banks. This insured that national bank notes would not suffer from the same discounting problem with which state bank notes were afflicted. In addition, all national bank notes were printed by the Comptroller of the Currency on behalf of the national banks to guarantee standardization in appearance and quality. This reduced the possibility of counterfeiting, an understandable wartime concern.5

The third goal of the Acts was to help finance the Civil War. The volume of notes which a national bank issued was based on the market value of the U.S. Treasury securities the bank held. A national bank was required to keep on deposit with the Comptroller of the Currency a sizable volume of Treasury securities. In exchange the bank received bank notes worth 90 percent, and later 100 percent, of the market value of the deposited bonds. If the bank wished to extend additional loans to generate more profits, then the bank had to increase its holdings of Treasury bonds. This provision had its roots in the Michigan Act, and it was designed to create a more active secondary market for Treasury bonds and thus lower the cost of borrowing for the federal government.5

It was the hope of Secretary of the Treasury Chase that national banks would replace state banks, and that this would create the uniform currency he desired and ease the financing of the Civil War. By 1865 there were 1,500 national banks, about 800 of which had converted from state banking charters. The remainder were new banks. However, this still meant that state bank notes were dominating the currency because most of them were discounted. Accordingly, the public hoarded the national bank notes. To reduced the proliferation of state banking and the notes it generated, Congress imposed a ten percent tax on all outstanding state bank notes. There was no corresponding tax of national bank notes. Many state banks decided to convert to national bank charters because the tax made state banking unprofitable. By 1870 there were 1,638 national banks and only 325 state banks.5

While the tax eventually eliminated the circulation of state bank notes, it did not entirely kill state banking because state banks began to use checking accounts as a substitute for bank notes. Checking accounts became so popular that by 1890 the Comptroller of the Currency estimated that only ten percent of the nation's money supply was in the form of currency. Combined with lower capital and reserve requirements, as well as the ease with which states issued banking charters, state banks again became the dominant banking form by the late 1880�s. Consequently, the improvements to safety that the national banking system offered were mitigated somewhat by the return of state banking.5

There were two major defects remaining in the banking system in the post Civil War era despite the mild success of the National Banking Acts. The first was the inelastic currency problem. The amount of currency which a national bank could have circulating was based on the market value of the Treasury securities it had deposited with the Comptroller of the Currency, not the par value of the bonds. If prices in the Treasury bond market declined substantially, then the national banks had to reduce the amount of currency they had in circulation. This could be done be refusing new loans or, in a more draconian way, by calling-in loans already outstanding. In either case, the effect on the money supply is a restrictive one. Consequently, the size of the money supply was tied more closely to the performance of the bond market rather than needs of the economy.5

Another closely related defect was the liquidity problem. Small rural banks often kept deposits at larger urban banks. The liquidity needs of the rural banks were driven by the liquidity demands of its primary customer, the farmers. In the planting season the was a high demand for currency by farmers so they could make their purchases of farming implements, whereas in harvest season there was an increase in cash deposits as farmers sold their crops. Consequently, the rural banks would take deposits from the urban banks in the spring to meet farmers� withdrawal demands and deposit the additional liquidity in the autumn. Larger urban banks could anticipate this seasonal demand and prepare for it most of the time. However, in 1873, 1884, 1893, and 1907 this reserve pyramid precipitated a financial crisis.5

When national banks experienced a drain on their reserves as rural banks made deposit withdrawals, new reserves had to be acquired in accordance with the federal law. A national bank could do this by selling bonds and stocks, by borrowing from a clearinghouse, or by calling-in a few loans. As long as only a few national banks at a time tried to do this, liquidity was easily supplied to the needy banks. However, an attempt en masse to sell bonds or stocks caused a market crash, which in turn forced national banks to call in loans to comply with Treasury regulations. Many businesses, farmers, or households who had these loans were unable to pay on demand and were forced into bankruptcy. The recessionary vortex became apparent. Frightened by the specter of losing their deposits, in each episode the public stormed any bank rumored, true or not, to be in financial straights. Anyone unable to withdraw their deposits before the bank�s till ran dry lost their savings or later received only pennies on the dollar. Private deposit insurance was scant and unreliable. Federal deposit insurance was non-existent.5

The 1907 Banking Panic

The 1907 crisis, also called the Wall Street Panic, was especially severe. The Panic caused what was at that time the worst economic depression in the country�s history. It appears to have begun with a stock market crash brought about by a combination of a modest speculative bubble, the liquidity problem, and reserve pyramiding. Centered on New York City, the scale of the crisis reached a proportion so great that banks across the country nearly suspended all withdrawals -- a kind of self-imposed bank holiday. Several long-standing New York banks fell. The unemployment rate reached 20 percent at the peak of the crisis. Millions lost their deposits as thousands of banks collapsed. The crisis was terminated when J.P. Morgan, a man of sometimes suspicious business tactics and phenomenal wealth, personally made temporary loans to key New York banks and other financial institutions to help them weather the storm. He also made an appeal to the clergy of New York to employ their Sunday sermons to calm the public�s fears.

Morgan�s emergency injection of liquidity into the banking system undoubtedly prevented an already bad situation from getting still worse. Although private clearinghouses were able to supply adequate temporary liquidity for their members, only a small portion of banks were members of such organizations. What would happen if there were no J.P. Morgan around during the next financial crisis? Just how bad could things really get? There began to emerge both on Wall Street and in Washington a consensus for a kind of institutionalized J.P. Morgan, that is, a public institution that could provide emergency liquidity to the banking system to prevent such panics from starting. The final result of the Panic of 1907 would be the Federal Reserve Act of 1913.

The Federal Reserve Act of 1913

Following the near catastrophic financial disaster of 1907, the movement for banking reform picked up steam among Wall Street bankers, Republicans, and eastern Democrats. However, much of the country was still distrustful of bankers and of banking in general, especially after 1907. After two decades of minority status, Democrats regained control of Congress in 1910 and were able to block several Republican attempts at reform, even though they recognized the need for some kind of currency and banking changes. In 1912 Woodrow Wilson won the Democratic party�s nomination for President, and in his populist-friendly acceptance speech he warned against the "money trusts," and advised that "a concentration of the control of credit ... may at any time become infinitely dangerous to free enterprise."3

Also in 1910, Senator Nelson Aldrich, Frank Vanderlip of National City (today know as Citibank), Henry Davison of Morgan Bank, and Paul Warburg of the Kuhn, Loeb Investment House met secretly at Jeckyll Island, a resort island off the coast of Georgia, to discuss and formulate banking reform, including plans for a form of central banking. The meeting was held in secret because the participants knew that any plan they generated would be rejected automatically in the House of Representatives if it were associated with Wall Street. Because it was secret and because it involved Wall Street, the Jekyll Island affair has always been a favorite source of conspiracy theories. However, the movement toward significant banking and monetary reform was well-known.3 It is hardly surprising that given the real possibility of substantial reform, the banking industry would want some sort of input into the nature of the reforms. The Aldrich Plan which the secret meeting produced was even defeated in the House, so even if the Jekyll Island affair was a genuine conspiracy, it clearly failed.

The Aldrich Plan called for a system of fifteen regional central banks, called National Reserve Associations, whose actions would be coordinated by a national board of commercial bankers. The Reserve Association would make emergency loans to member banks, create money to provide an elastic currency that could be exchanged equally for demand deposits, and would act as a fiscal agent for the federal government. Although it was defeated, the Aldrich Plan served as an outline for the bill that eventually was adopted. 5

The problem with the Aldrich Plan was that the regional banks would be controlled individually and nationally by bankers, a prospect that did not sit well with the populist Democratic party or with Wilson. As the debate began to take shape in the spring of 1913, Congressman Arsene Pujo provided good evidence that the nation�s credit markets were under the tight control of a handful of banks � the "money trusts" against which Wilson warned.1 Wilson and the Democrats wanted a reform measure which would decentralize control away from the money trusts.

The legislation that eventually emerged was the Federal Reserve Act, also known at the time as the Currency Bill, or the Owen-Glass Act. The bill called for a system of eight to twelve mostly autonomous regional Reserve Banks that would be owned by the banks in their region and whose actions would be coordinated by a Federal Reserve Board appointed by the President. The Board�s members originally included the Secretary of the Treasury, the Comptroller of the Currency, and other officials appointed by the President to represent public interests. The proposed Federal Reserve System would therefore be privately owned, but publicly controlled. Wilson signed the bill on December 23, 1913 and the Federal Reserve System was born.6

Conspiracy theorists have long viewed the Federal Reserve Act as a means of giving control of the banking system to the money trusts, when in reality the intent and effect was to wrestle control away from them. History clearly demonstrates that in the decades prior to the Federal Reserve Act the decisions of a few large New York banks had, at times, enormous repercussions for banks throughout the country and the economy in general. Following the return to central banking, at least some measure of control was removed from them and placed with the Federal Reserve.

References:

1. Davidson, James West, Mark A. Lytle, et al, (1998), Nation of Nations, New York: McGraw-Hill.

2. Galbraith, John K. (1995), Money: Whence it Came, Where it Went, Boston: Houghton Mifflin.

3. Greider, William (1987), Secrets of the Temple, New York: Simon & Schuster.

4. Griffin, G. Edward (1995), The Creature from Jekyll Island, Appleton: American Opinion Publishing, Inc.

5. Kidwell, David S. and Richard Peterson (1997), Financial Institutions, Markets, and Money, 6th edition, Fort Worth: Dryden Press.

6. "Wilson Signs the Currency Bill," New York Times, pages 1-2, December 24, 1913.

quote:

Yes it is. It is not owned by the government. But if you have some third party source explaining your point, by all means present it..

Ok once again ...

I've explained exactly how ownership of the Fed is structured, EXACTLY how it has been audited by both congress and the GAO, and included a link to a few of the tens of hundreds of audits that have been conducted ...

http://www.tranceaddict.com/forums/...d=&pagenumber=1

From that thread:

While the Federal Reserve Banking system is considered an independant central bank, it's actions are audited by the GAO and specifically, the Senate banking committee has oversight over the Federal Reserve Board, the Federal Advisory Council, the Federal Open Market Committee, and Federal Reserve banks and their branches should it feel that the Federal Reserve system's actions are not in line with its goals outlined by its charter.

http://thomas.loc.gov/cgi-bin/bdque...y:@@@L&summ2=m&

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The Importance of the Federal Reserve
Executive Summary


The Federal Reserve � our Central Bank � is one of the country's most powerful economic institutions. The Federal Reserve is relevant for Congress not only because the Constitution gives monetary powers to Congress but also because Congress created the Fed and, therefore, has critically important responsibilities for Federal Reserve oversight.

This paper provides a brief overview of what Members of Congress should know about the Federal Reserve. It is intended to lay the groundwork for several subsequent papers surrounding issues related to congressional oversight of Federal Reserve monetary policy and the goal of price stability.

Congressional oversight of the Federal Reserve and monetary policy is important because:



Monetary policy can dominate fiscal policy in certain circumstances.

Inflation is determined by monetary policy.

The Federal Reserve influences interest rates.

The Federal Reserve stabilizes the financial system.



This paper briefly summarizes the structure and operating procedures of the Federal Reserve and comments on the significance of congressional oversight.

The Importance of the Federal Reserve

Introduction
Although the Federal Reserve�our Central Bank (or monetary authority)�is one of the country's most powerful economic institutions, it is also one of the most misunderstood. For Congress, the Federal Reserve is relevant because (1) the U.S. Constitution (Article I, Section 8) explicitly gives Congress the power over money and the regulation of its value and (2) this responsibility was delegated by Congress to the Federal Reserve; the Federal Reserve was created by an act of Congress. Accordingly, Congress has important responsibilities for overseeing the Federal Reserve and monetary policy.

This paper provides a brief overview of what (and why) Congress should know about the Federal Reserve. A broad-brush overview, it is intended to lay the groundwork for several subsequent papers addressing issues related to congressional oversight of Federal Reserve monetary policy and the goal of price stability.


Our Central Bank: The Federal Reserve
As the Nation's Central Bank, the Federal Reserve is granted special privileges and so assumes the responsibilities and characteristics of such a bank. It monopolizes the issuance of paper money, serves as banker for both the government and commercial banks, and acts as lender of last resort. The latter, in turn, calls for bank regulatory responsibilities. Since Federal Reserve operations work to centralize reserves (Federal Reserve notes and deposits form a large portion of bank reserves), they entail responsibility for reserve management and hence monetary policy. Two critically important macroeconomic functions of the Central Bank, therefore, are the maintenance and achievement of price and financial system stability (i.e., stable monetary policy and the provision of lender-of-last-resort services).


Why Federal Reserve Functions are Important
The importance of congressional oversight of the Federal Reserve cannot be overemphasized. These functions are important, for example, because they imply that the Federal Reserve controls and hence is responsible for the management of total spending or aggregate demand as well as inflation. In carrying out its monetary policy management (via manipulating reserves), the Federal Reserve influences interest rates�especially short-term rates�as well as foreign exchange rates and other financial market prices. And in times of financial crisis, the Federal Reserve's lender-of-last-resort function stabilizes the entire financial system. The significance of these important considerations is briefly summarized in turn.


Management of Aggregate Demand: Monetary Policy Dominates Fiscal Policy.
Most economists recognize that total spending or aggregate demand is determined more by monetary policy than by fiscal policy. In other words, if Congress passes tax or spending legislation intended to affect total spending or aggregate demand, these effects can be fully offset or outweighed by changes in monetary policy. Indeed, accurate counter-cyclical fiscal policy�altering budget deficits to manage economic activity or aggregate demand�is now seen as neither possible nor desirable. Economists no longer agree on even the direction of the economic effects of changing budget deficits,[1] yet all agree that changes in monetary policy do have predictable and potent effects on aggregate demand and economic activity.
This implies that changes in monetary policy are often a major factor in movements of the business cycle; many booms and recessions are directly related to changes in monetary policy. Conversely, stable economic activity is often the result of appropriate, stable monetary policy. For example, in recent years the Federal Reserve deserves credit for instituting a restrained, non-inflationary policy, which not only has helped to stabilize the economic cycle but has helped to stabilize most financial markets as well.


Inflation is Determined by Monetary Policy.
Federal Reserve monetary policy is also the key determinant of inflation. It is well known that, among other economic effects, inflation can adversely affect savings, distort investment decisions, and be used by government to enhance its tax revenue and reduce its real debt. Inflation works to distort the signals of the price system, the signaling mechanism of a free market economy. Partly for this reason, recent research has shown that higher inflation is associated with lower economic growth. Accordingly, the only lasting contribution monetary policy can make toward fostering long-term economic growth is to promote price stability. Consequently, there is a growing consensus among experts that price stability should be the key objective of monetary policy. Congress can, of course, mandate this objective to the Federal Reserve.

Interest Rates Are Influenced by the Federal Reserve.
The Federal Reserve also influences interest rates which affect key interest-rate sensitive sectors of the economy such as housing, autos, and investment. More specifically, the Federal Reserve influences interest rates by manipulating reserves. Short-term rates are more directly influenced by Federal policy because its reserve operations involve purchases and sales of short-term government securities which influence bank reserves. Nonetheless, long-term rates are also influenced by monetary policy. Among other influences, for example, long-term rates are affected by changes in inflationary expectations as well as expectations of Fed policy. Nonetheless, the only way monetary policy can sustain lower long-term rates is to promote price stability, thereby removing the influence of both inflationary expectations as well as uncertainty premiums. Certainly, Congress has reason to ensure the provision of lower long-term rates in this way.


The Federal Reserve is the Lender of Last Resort.
During financial crises, provision of lender-of-last-resort services can stabilize the financial system. The Central Bank, being the ultimate supplier of system-wide reserves, can satisfy sharp increases in reserve or liquidity demand, thereby preventing systemic liquidity shortages and stabilizing the financial system. Failure to provide this function as, for example, occurred in the Great Depression of the 1930s, can be disastrous. On the other hand, liquidity provision prevented any serious financial system fallout from the sharp 1987 stock market crash and 1989 stock market decline. The Federal Reserve (and by inference the Congress) has responsibility to ensure that lender-of-last-resort safeguards are adequate and in place in case of unforseen financial shocks.

STRUCTURE

The Federal Reserve's organizational structure is unusual, some would say even Byzantine. It is a Federal system made up of (1) a central government agency, the Board of Governors in Washington, D.C., (2) 12 regional banks located in major U.S. cities, and (3) a monetary policy decision-making unit, the Federal Open Market Committee (FOMC), composed of representatives from both the Board and banks.

The Board of Governors (BOG).
The BOG was established as a Federal agency. It is composed of seven Governors appointed by the President of the United States and confirmed by the Senate to staggered 14-year terms. A Chairman (and Vice Chairman) are also appointed by the President and confirmed by the Senate, for four-year terms. The Board of Governors and its staff of about 1,700 are located in Washington, D.C.

Twelve Federal Reserve Banks.
Twelve Federal Reserve Banks serve as the operating arm of the Federal Reserve system; they perform a number of functions such as operating a nationwide payment system, supervising certain financial institutions, distributing the nation's currency and coin, and serving as a banker for commercial banks and the U.S. Treasury. Each bank has a President nominated by its board of directors and approved by the Board of Governors. The New York Bank is clearly "the first among equals" since it not only sits in the world's financial center but serves as the Federal Open Market Committee's operating arm, conducting open market operations and foreign exchange intervention. Congress chartered these banks and, consequently, has oversight responsibilities for them.

Federal Open Market Committee.
The FOMC, the Federal Reserve's key monetary policy decision-making unit, formally meets eight times a year in Washington, D.C.[3] It oversees open-market operations, the principal tool of monetary policy which influences short-term interest rates and determines reserve and monetary growth. It also directs foreign exchange market operations of the Federal Reserve System. The FOMC is made up of the seven Board Members and five of the 12 Reserve Bank presidents.[4] These presidents bring "grass roots" information to the meetings and, historically, have had relatively conservative voting records due in part to their insulation from political pressures. Notably, the structure described here was designed by Congress and therefore can be changed by Congress.

POLICY OPERATIONS

The Federal Reserve conducts monetary policy principally using open-market operations (purchases/sales of securities) to alter bank reserves and influence short-term interest rates, but it also can employ the discount rate and changes in reserve requirements as policy tools. In so doing, the Federal Reserve uses the Fed funds rate as its key policy instrument. Movements in this rate (relative to other rates) in turn influence a wide array of financial and economic variables with differing time lags. These movements, for example, influence financial market variables (such as other interest rates, foreign exchange rates, commodity prices, and yield spreads), monetary and credit aggregates, measures of economic and business activity, and eventually broad measures of inflation. Because of the long time lags involved between adjustments to Federal Reserve instruments and ultimate policy goals, monetary policy makers look for those variables that are both reliably influenced by Fed policy moves and in turn predictably related to subsequent movements in policy goals; i.e., they look for reliable intermediate guides to policy.

Over the years, controversies about monetary policy have often related to debates over which variables best serve as intermediate policy guides or targets. In the past, for example, Keynesian economists prescribed target variables such as unemployment or interest rates whereas monetarist economists prescribed monetary aggregates as targets. Both of these types of targets, however, have proven unreliable. Currently, the Federal Reserve has no single explicit intermediate policy target. Rather, it uses an eclectic approach, but undoubtedly has paid more attention to movements in financial market variables than previously was the case.

CONGRESSIONAL OVERSIGHT OF MONETARY POLICY

Detailed knowledge of the intricacies and fine points of monetary policy operations, however, is not necessary for successful congressional oversight. Rather, the keys for Congress are to clearly establish a viable objective for the Federal Reserve and to ensure the Central Bank is fully accountable for achieving this goal. This can be fostered by establishing appropriate incentives for monetary policy makers as well as mandating enhanced reporting and disclosure requirements related to progress in achieving stated objectives. Oversight, therefore, should promote policy transparency which can help to promote the credibility of a given monetary policy.

Notably, congressional oversight of the Federal Reserve need not imply increased political influence on monetary policy, especially if explicit, objective policy goals such as price stability are established for the Central Bank. Such oversight can actually work to minimize political influence by ensuring Executive Branch sway over monetary policy reflecting their appointments

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etc., etc., etc.,

I can get into stocks issued by the Fed, how profits are returned to the Treasury department ... I mean where do you want to go?

thanks occrider, excellent post. i now know more than i ever wanted to about the history of the US' banking system

quote:

Where did you read this?

quote:

The seven members of the Board, each representing a different Federal Reserve District, are appointed for 14-year terms by the President of the United States, with the advice and consent of the U.S. Senate. Board members who have served a full term may not be reappointed. The President also appoints, from among the seven Board members, the chairman and vice chairman of the Board for four-year terms. These two governors may be reappointed to their positions.

http://www.richmondfed.org/publicat...y/structure.cfm

sounds like the president has oversight here to appoint whom he chooses, yes?? he chooses the board, then chooses from those people who is to be chairman. but, i am open to correction if im misunderstanding something

A message from Ron Paul

quote:

The other day, my old sparring partner in so many Congressional committee hearings, Alan Greenspan, was on the Fox Business Channel. After Alan promoted his new book, the reporter asked if we really needed a central bank. Greenspan looked stunned, and then said that was a good question; he actually talked about fiat money vs. a gold standard. Now, the ex-Fed chairman is not about to endorse our sound monetary policy, but you know our Revolution is working when such a question is asked in the mainstream media, and this powerful man gives such an answer. You and I are reopening a whole host of questions that the establishment thought it had closed off forever: on war, on taxes and spending, on inflation and gold, and on the rule of law and our Constitution. A few years ago, I asked a famous conservative columnist a question. What did he think about the prospects for a restored Robert Taft wing of the Republican party? He thought I was joking. As you know, I was not. After all the aggressive wars, the assaults on our privacy and civil liberties, the oppressive taxation, and the crazed spending and deficits, I believe that many Republican voters are ready to return to our roots. And the big boys feel it too. It is no coincidence that the Republican National Committee invited me to a fundraising dinner involving only "top-tier candidates." Some of the opposition claims that I am not a "real Republican," whereas I am the only one in the race. And our campaign is registering new Republican voters by the boatload. None of my opponents is doing anything approaching that. Of course, they pooh-pooh our success. "He's just registering Democrats and Independents and people who have never voted before." Well, yes. It's called growth. We are laying the groundwork for the primaries. All over America, our support is wide and deep and growing, and young people are joining like never before. After the Dearborn debate, I went to the University of Michigan for a rally. 2,000 students turned out, something that has happened to no other candidate this year. The crowd cheered all our ideas, but especially our opposition to the Federal Reserve, and our support for real money of gold and silver, as the Constitution mandates, instead of prosperity-wrecking fiat money. American politics hasn't seen anything like this in many decades. It is truly revolutionary. But time is getting short. We must do massive radio and TV advertising, open many small offices (three in just South Carolina the other day), staff them, pay all the bills, and turn out our vote with massive organizational and phone-bank efforts. As you know, the blackout is ending; our campaign is starting to get mainstream media attention, thanks to growing donations and volunteers. And contributions are the key to more attention, and to our being able to do the actual work of victory. Good news: our recent green-eyeshade analysis of all the candidates' net finances, which got so much press attention, shows our campaign as one of only three in the top-tier. But we must keep moving up, and the Iowa caucuses are now on January 3rd. The New Hampshire primary may be in early December! As always, everything depends on you. Please, make the most generous donation you canhttps://www.ronpaul2008.com/donate/ as soon as you can. I need your help so badly. The other day, an 8-year-old boy handed me a small white envelope. It contained the $4.00 he had saved from his allowance, as a donation to our campaign. I can't tell you how seriously I take my responsibility to work hard, and spend frugally and effectively, to be worthy of his support, and yours. Please help me keep working, even harder and more effectively, for all we believe in. Without you, I'd have to pack it in. Donate now https://www.ronpaul2008.com/donate/. We have more than an election to win. We have a country to save. Ron Paul

After seeing Paul give a speech a few years ago on C-span, I decided that this guy really deserved my support, so I donated $50 to his re-election campaign, and sent off an email to his congressional address telling him I did so, and to keep up the great work.

I didn't expect him to actually read it, but a few days later I got a personal response from him. He was very grateful and promised me he would never give up the fight for liberty. He didn't need to go through the trouble of thanking me personally...but he really wanted to. That shows the type of character he has.

We could use a man like that in the White House.

OCC, can I have a summary of all that. Specifically, how the secret Jekyll Island meeting by international bankers somehow was for the benefit of the nation...

Also, how the Fed is not privately owned. Please, can you keep it short?

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