Welcome to Oz. Meet the man (or men) behind the curtain.
The European Central Bank has moved to halt Europe's runaway debt crisis by pledging to buy government bonds from Italy and Spain.The move to prop up Europe's struggling nations came after a day of frantic discussions between the finance ministers of the world's leading economies. Markets open for the first time since Standard & Poor's decision to cut the US's credit rating from AAA late on Friday.
Maybe this is a good time to take a look at central banking, and specifically, the Federal Reserve. A few years back, I began reading a large volume titled The Creature from Jekyll Island: A Second Look at the Federal Reserve by G. Edward Griffin, describing the workings and inception of the Federal Reserve during a secret meeting on Jekyll Island, Georgia, in 1913. I never made my way through it. Perhaps if I blog some salient points from it, I can stick with it, and those of us who realize the bankers truly are banksters as they’ve been called of late will be a little more enlightened as to what’s going on and how we got here.
Texas Representative and presidential aspirant Ron Paul seems to be the most vocal about the “evils” of the Federal Reserve, so I may as well start by quoting his website.
The Federal Reserve is the chief culprit behind the economic crisis. Its unchecked power to create endless amounts of money out of thin air brought us the boom and bust cycle and causes one financial bubble after another. Since the Fed’s creation in 1913 the dollar has lost more than 96% of its value, and by recklessly inflating the money supply the Fed continues to distort interest rates and intentionally erodes the value of the dollar.[...]
HR 1207, the bill to audit the Federal Reserve, swept the country and made the central bankers shudder at their desks. The bill passed as an amendment both in the House Financial Services Committee and in the House itself.
[...]
A handful of Fed-loving U.S. senators led by Chris Dodd rewrote the Senate version of the Financial Reform Bill to strip out Ron Paul’s Audit the Fed amendment and actually expand the Fed’s power over banks, lending and money. As Alan Grayson pointed out here, and Ron Paul commented on here, the Dodd bill completely eliminated legislation to audit the Federal Reserve, which already passed in the House.
[...]
On June 30, 2010, the GOP introduced Ron Paul’s Audit the Fed bill as a motion to recommit, which was the last chance to alter the financial regulation bill. Audit the Fed failed by a vote of 229-198. All Republicans voted in favor of the measure with 23 Democrats crossing the aisle to vote with Republicans. 114 co-sponsors of HR 1207, all Democrats, jumped ship and voted against Audit the Fed.
OMG, the cheese, Ron, please stop with the cheese. There’s also an “Audit the Fed” song on his site.
But, okay, cheese aside, here’s Ron Paul himself on the need to audit the Federal Reserve.
[The] big guns have lined up against HR 1207, the bill to audit the Federal Reserve. What is it that they are so concerned about? What information are they hiding from the American people?[...]
[Chairman Ben] Bernanke argues that the knowledge that their discussions and decisions will one day be scrutinized will compromise the freedom of the Open Market Committee to pursue sound policy. If it is sound and honest and serves no special interest, what’s the problem?
[...]
The detailed transcripts of the FOMC meetings are released every 5 years, so why would this be so different and what is it that they don’t want the American people to know? Is there something about the transcripts that need to be kept secret, or are the transcripts actually not verbatim?
[...]
Only an audit of the Federal Reserve will answer these questions.
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Once we get the audit bill passed and we can reveal what they are doing, I think the next step is to end the Fed. That’s why they don’t want that.
End the Fed? Is that what we need to do? If so, how would we go about doing that and what would be the short- and long-term repercussions? Not that "we" could effect an end to the Fed, I'm just asking, because I don’t have a clue. I guess I should start with understanding what the Fed is and how it came about.
So, back to the book, and the first (and probably most lengthy) installment.
The Creature from Jekyll Island:
A Second Look at the Federal Reserve
(2002 – G. Edward Griffin)
Chapter 1
“Picture a party of the nation’s greatest bankers stealing out of New York on a private railroad car under cover of darkness, stealthily hieing hundreds of miles South, embarking on a mysterious launch, sneaking on to an island deserted by all but a few servants, living there a full week under such rigid secrecy that the names of not one of them was once mentioned lest the servants learn the identity and disclose to the world this strangest, most secret expedition in the history of American finance.” – B.C. Forbes 1916
The party:
1. Rhode Island Senator Nelson W. Aldrich (father-in-law to John D Rockefeller, JR)
2. Abraham Piat Andrew, asst Secretary of the US Treasury
3. Frank A Vanderlip, president, National City Bank of New York (representing Wm Rockefeller and investment bankers Kuhn, Loeb & Co)
4. Henry P Davison, senior partner of JP Morgan
5. Charles D Norton, president of JP Morgan’s First National Bank of NY
6. Benjamin Strong, head of JP Morgan’s Bankers Trust Company
7. Paul M Warburg, a German immigrant, partner in Kuhn, Loeb & Co (representing Rothschild bankers in England & France, and brother of Max Warbug, director of the German Reichsbank and financial adviser to the Kaiser)
“Once aboard the private car we began to observe the taboo that had been fixed on last names. … Davison and I adopted even deeper disguises, abandoning our first names. On the theory that we were always right, he became Wilbur and I became Orville….If it were to be exposed publicly that our particular group had got together and written a banking bill, that bill would have no chance whatever of passage by Congress.” – Frank Vanderlip
In 1910, the number of banks in the United States was growing at a phenomenal rate. In fact, it had more than doubled to over twenty thousand in just the previous ten years. … By 1913, when the Federal Reserve Act was passed, [non-national banks had grown to] seventy-one percent [and held] fifty-seven percent of deposits. In the eyes of [the seven conspirators] this was a trend that simply had to be reversed.
[Furthermore], between 1900 and 1910, seventy percent of the funding for American corporate growth was generated internally (via profits), making industry increasingly independent of the banks. Even the federal government … had a growing stockpile of gold, was systematically redeeming the Greenbacks … issued during the Civil War, and was rapidly reducing the national debt. [The bankers wanted to] tip the balance of interest rates downward to favor debt over thrift. To accomplish this, the money supply simply had to be disconnected from gold and made more plentiful.They were often competitors, and there is little doubt that there was considerable distrust between them and skillful maneuvering for favored position in any agreement. But they were driven together by one overriding desire to fight their common enemy. The enemy was competition.
(There is another issue concerning these men – the possible demand of depositors for return of their money (the threat of a “run” on a bank), or even spending all of the money they deposit before it has had time to earn interest for the bank. Banks loan other people’s money to their borrowers on the bet that the depositor won’t want it back before the bank can collect enough interest off its loans to give it back without digging into its own pockets. And banks loan more money than they have – it's the "magic of money.")
[In] modern banking … promises-to-pay often exceed savings deposits by a factor of ten-to-one. And, because only about three percent of these accounts are actually retained in the vault in the form of cash – the rest having been put into even more loans and investments – the bank’s promises exceed its ability to keep those promises by a factor of over three hundred-to-one.
The secret Jekyll Island party's agenda:
1. How to stop the growing influence of small, rival banks and to insure that control over the nation’s financial resources would remain in the hands of those present;
2. How to make the money supply more elastic (so it could be expanded and contracted at will) in order to reverse the trend of private capital formation and to recapture the industrial loan market;
3. How to pool the meager reserves of the nation’s banks into one large reserve so that all banks will be motivated to follow the same loan-to-deposit rations. This would protect at lease some of them from currency drains and bank runs;
4. Should this lead eventually to the collapse of the whole banking system, then how to shift the losses from the owners of the banks to the taxpayers;
5. How to convince Congress that the scheme was a measure to protect the public.
For purposes of public relations and legislation, they would devise a name that would avoid the word bank altogether and which would conjure the image of the federal government itself. Furthermore, to create the impression that there would be no concentration of power, they would establish regional branches.
[Warburg argued that the solution] was to follow the German example whereby banks could create currency solely on the basis of “commercial paper,” which is banker language for I.O.U.s from corporations.
“Before the passage of this Act, the New York bankers could only dominate the reserves of New York. Now we are able to dominate the bank reserves of the entire country.” -- Senator Nelson Aldrich, 1914
“The Federal Reserve System is a legal private monopoly of the money supply operated for the benefit of the few under the guise of protecting and promoting the public interest.” – Antony Sutton, Hoover Institution Research Fellow
Since its inception, it has presided over the crashes of 1921 and 1929; the Great Depression of ’29 to ’39; recessions in ’53, ’57, ’69, ’75, and ’81; a stock market “Black Monday” in ’87; and a 1000% inflation which has destroyed 90% of the dollar’s purchasing power. Remember, this edition of this book was written in 2002, so add to that the “recession” we are either in or not in now, depending upon whom you ask, and the severe failure of the banks in 2008 and subsequent crumbling of the economy.
....but hey, do what you want....you will anyway.
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