End the Fed « The Thinking Housewife

End the Fed

January 15, 2018

FROM The National Center for Constitutional Studies:

The whole purpose of establishing the Federal Reserve System was to prevent depressions, stabilize the currency, and protect the savings and checking deposits of the people in the custody of the banks.

However, there are three things that the Founding Fathers identified as outright enemies to any sound money system, and the Federal Reserve contains all three of them.

The first thing they said the nation should avoid is turning over to a group of private bankers the right to print the official currency of the nation. They said this right is inherent in the people and belongs to the people’s government. Whenever this right has been delegated to private bankers, they have always used it to abuse the people and gradually devour the wealth of the nation. It will be recalled that Jefferson wrote:

If the American people ever allow private banks to control the issue of currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers conquered.

Abraham Lincoln also warned about possible abuses by private bankers. After the National Bank Act was passed in 1863, he wrote:

I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. Corporations [of banking] have been enthroned, 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 the wealth is aggregated in a few hands and the Republic destroyed.

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The second deception in the whole Federal Reserve System is the fact that the private banks which own the stock in the Federal Reserve System charge the United States interest for borrowing the country’s own currency!

The Federal Reserve scheme provides not only that all U.S. currency shall be printed as Federal Reserve notes, but that if the government wants to use these notes it must give the Federal Reserve IOUs in the form of government bonds on which interest will be paid until the bonds have been redeemed.

The question immediately arises, “Well, what did the banks loan to the government in exchange for these bonds?” The answer is, “Nothing, absolutely nothing.” The banks paid for the printing of their Federal Reserve notes and gave them to us, but they are not redeemable in gold, silver, or anything else of value. They are just paper, backed by virtually nothing. The question next arises, “Then why are they able to charge us interest when all they are doing is printing our own currency?”

The answer is that in 1913 the Congress gave the Federal Reserve the legal “right” to print our money, and that right is “as good as gold.” Therefore, if we want to use the Fed’s money, we have to borrow it and give them federal IOUs for the amount obtained. And, of course, each IOU (government bond) is something on which interest must be paid.

This whole arrangement is so totally irrational that the former chairman of the Banking and Currency Committee, Congressman Wright Patman (D-Texas), asked Marriner S. Eccles, the Utahn who served as chairman of the Federal Reserve Board from 1934 to 1948, the following:

“Mr. Eccles, how did you get the money to buy these two billion dollars of government bonds?”
Mr. Eccles: We created it.
Mr. Patman: Out of what?
Mr. Eccles: Out of the right to create credit money.

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Since it is the government’s right to create money in the first place, why should it have to borrow its own money from the Federal Reserve banks and give interest bearing bonds or IOUs in exchange for the money?

A modern scholar, H. S. Kenan, has written:

Government, possessing the power to create and issue currency and credit as money and enjoying the right to withdraw both currency and credit from circulation by taxation or otherwise, need not, and should not borrow capital at interest as the means of financing governmental work and public enterprise. The government should create, issue, and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of consumers. The privilege of creating and issuing money is not only the supreme prerogative of government, but it is the government’s greatest creative opportunity. (Kenan, Federal Reserve Bank, p. 202; emphasis added.)

By creating and issuing its own money, Kenan said the people could avoid a “debt” economy which bankers instinctively promote. He wrote:

The taxpayers will be saved immense sums in interest, discounts, and exchanges. The financing of all public enterprises, the maintenance of stable government and ordered progress, and the conduct of the Treasury will become matters of practical administration. The people can and will be furnished with a currency as safe as their own government. Money will cease to be master and become the servant of humanity. Democracy will rise superior to the money power. (Ibid., p. 202.)

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As we mentioned earlier, fractional banking was invented in Europe around four hundred years ago. It allows a bank to set up a “reserve” to cover any claims which happen to come in, and then to go ahead and loan many times more money on credit than the “reserve” in the bank. By this means the bank loans out and charges interest on considerable credit it doesn’t even have. For everybody else, it is a fraud to loan, rent, or sell something which does not exist. Fractional banking should have been outlawed many years ago.

One of the most dangerous devices employed by the Federal Reserve under fractional banking is its power to bounce the level of required reserves up and down so as to control the money supply and the interest rates. The Congress which passed the Federal Reserve Act assumed that this would be done in the interest of the public, but as we shall see later, the opposite occurred.

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There is no doubt that history has caught up with the Federal Reserve System. The Federal Reserve Act unconstitutionally delegated to a consortium of private bankers one of the most precious rights a nation possesses-the right to manage its own system of money and credit.

Under the policies of the Federal Reserve System, national indebtedness has been encouraged, inflation has skyrocketed, and the value of the American dollar has sunk so low that savings have been eaten up, fixed incomes have become a dribble, and a once wealthy nation finds itself owing more than all the rest of the nations of the earth combined.

Fortunately, there is a way out of all this. It was provided in the section of the act which is now designated as Section 31. This is the section which allows the federal government to “amend, alter, or repeal” the Federal Reserve Act at any time. It is time Americans began talking seriously about Section 31 of the Federal Reserve Act so that we can save what is left of the American economic heritage. This may be the only means by which the President can save his program.