History of the Federal Reserve and The Fed Conspiracy

The last two questions in the original post are invalid since I do not agree with the premise to begin with. I've answered the first two indirectly, but I could expand on it:

What do you think about the Fed?

Irrespective of the monetary system, so long as we maintain our current financial system (fractional reserve banking), a central bank is necessary in order to monitor the banks' activities, thus ensuring that:

1. Banks have a sufficient amount of reserves available in order to respond to "small" withdraws.
2. The banking system as a whole has a sufficient amount of reserves in order to respond to all withdraws.

With regards to monetary policy, a central bank is necessary in order to:

1. Adjust the rate at which banks can borrow reserves to provide a relatively flat effective federal funds rate across the nation.
2. Monitor inflation and prevent banks from freely creating new lending capacity.

What do you think about the article (or at least the funny pictures)?

I think it's ironic that PJ Morgan would give up the privilege to freely create money. If I were a banker, I couldn't wait to abolish the system.


Now who's going to answer my question again?

 

Why does the FED have to be a Privately-held Corporation? Why does government allow it to print money, almost create virtual, digital money, without even printing it, and then loaning it to the Government and other banks "on interest"? This is Robbery...

 

There is a natural limit to how much banks can loan. Independent of any central bank or regulation, a bank stretched passed this limit is subject to bank runs & bankruptcy. The federal reserve has obviously not been stricter than this natural limit, because banks are still subject to runs and insolvency crises.

The number of banks grew with the economy until shortly after the introduction of the fed. Since then, its been a game of consolidation and many times the acquisitions are funded through public money.

 

Bravo to korr's response, but I thought I would follow up by saying that,

As the lender of last resort, the FED enables the banks to go deeper into insolvency than they would be able to under free market conditions.

The limits on loaning is not the issue. It's the capacity to provide taxpayer funded bailouts at all costs that makes the FED so valuable.

 

That appears to makes sense logically, but do you have any evidence? If you can find some reserve stats of banks prior to 1913, you would have a cogent argument. Keep in mind that banks today hold contractual clearing balances on top of the required reserves.

Korr, the "natural limit" is called the required reserve ratio. It would be good for you to remember that term. What you're saying proves my point; banks are still subject to risk. My money is safe at the bank, but in order to guarantee that safety, the bank bears a risk. The point that I am making ultimately is that the way the Fed operates does not support the common conspiracy.
Don't get me wrong, Guerilla's point is well taken; there's a relationship between fiat money and the Federal Reserve. There's nothing conspiratory about that. However, your article and the videos that are being posted in this thread are just garbage.

 

Prior to 1913 you could turn in your notes and receive metals. This would cause a run on the money if people went to go retrieve deposits all of a sudden, and they did, you're right. But at least then you had the chance to get specie for your notes. Now you get, ummm, more paper?

The problem with the reserve ratio is that it helps the banks, not the common man. If I were to borrow $100,000 from a bank, and put $50,000 back into my savings account while spending the other $50,000 the bank would be able to "reserve" that $50,000 and issue a new line for $500,000. See the problem there?

You're right, the conspiracy garbage is garbage. There doesn't have to be a conspiracy to get rid of the Federal Reserve. It devalues money which destroys the middle class.

 

Nice straw man. Of course banks like fractional reserve banking; that's why they started practicing it. Fractional reserve banking has been around before the Fed. Do you know what gave birth to it? The gold standard. In addition, you don't even seem to understand how fractional reserve banking works to begin with. If you deposit $50,000, their required reserve would be $5,000 at 10% RRR, not $50,000. In other words, if you deposit $50,000, the most that the bank can loan out is $45,000.
So yes, I do see the problem; you don't understand how fractional reserve banking works.

 

No, you're confusing the nature of banking with regulations on banking. There are countries with a required reserve ratio of zero, but banks in those nations could not expect to stay solvent if they went as far as the law would allow them. Reserves were required nationally prior to the creation of the Fed, so it sounds like you're trying to credit the Federal Reserve with something it didn't even originate.

If that is the point you are trying to make, I must have missed it somewhere. The few monopolies the "progressive-era" legislation (socialist) was supposed to save us from has done little but institutionalize them, subsidize them, and make it difficult for competition to arise.

 

Actual, money changers came up with it. It's not a result of the gold standard but it was practiced first by goldsmiths. However, fractional reserve banking is technique of counterfeit, which goes back to the first fiat money used in China.

The goldsmiths didn't counterfeit gold, they counterfeited the gold receipts, bills of credit, what-have-you.

Your statement that it was the gold standard, is a subtle way of again trying to diminish gold as money. But you already knew that.

 

Reserve requirements have been around for many years, but its purpose has changed since the creation of the Fed and that's the point. Prior to the Fed, the reserve requirements were thought to ensure your deposits. That obviously wasn't the case since bank runs were still a reality. Today, the reserve requirements hold no such purpose since the Federal Reserve can meet the liquidity needs of the entire banking system. The reason why the Fed still enforces reserve requirements is to limit the banks' ability to loan money. This way, thy can use the required reserve ratio as one of their monetary policy tools.

 

I still don't understand how it's counterfeiting. Could you draw up a simple balance sheet and demonstrate the process to prove that it is?

 

Of course you don't. Every time we get to discussing what money is, you abandon the discussion.

Why do you need a balance sheet? Accounting tricks?

It is impossible to hold my deposit with the promise of redemption on demand and loan it out simultaneously. Let alone loan out 10 times my deposit.

You keep thinking of money as paper, as numbers. Money represents labor, resources, productivity, deferred consumption, savings/capital. Tangible things that cannot be counterfeited. Only paper can. Or do you have a means to magically multiply a bushel of apples? A bar of gold? Ready2Alchemy?

So either your paper money has no value and counterfeit is legit because value is not diluted, or it is a means of exchange, representing value and hence cannot be fabricated "out of thin air".

Let me know. Or you could waste all of our time on "accounting tricks"

 

I will look for this, however if I'm to be honest, it's way down my priority list. I understand where you are coming from, but right now, the FED is low down my list of issues to work on.

Like I said, I will look into it. I think I know where to get the stats.

No, this is where you are incorrect. You have been (like many people) socialized to believe that anything that questions doctrine or pushes the idea that bad things may be planned in private is conspiracy, and conspiracy by it's nature nutty. This, is a big problem. First, the conspircy theorists try to tie too many theories into one grand conspiracy, and many of them do not fact check. That said, fiat money was introduced by conspiracy, as was the FED.

The fact that it is very difficult, to manuver you into a discussion about it, someone who is quite knowledgable is testament to just how successful the conspiracy has been.

Have you seen Fiat Empire yet? I believe you have mentioned before that you don't buy the story G. Edward Griffin' take in the Jekyll Island book, but nonetheless, you must be willing to admit that something is up with a central bank, when it clearly violates the spirit of the Constitution, and is the third attempt at a national bank after Jefferson and Jackson collapsed the first two tries.

Fiat Empire



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I don't think "something is up" with the central bank for the same reason that most people do. I think that the current central banking system ought to be changed because it's inefficient, not because it's unconstitutional or it's owned by a bunch of unknown foreign bankers; the supreme court has already agreed unanimously that a central banking system is constitutional more than once under the necessary and proper clause. There's also no evidence that foreign bankers (or private bankers) own the Fed.
Just because I am against conspiracy theories, it doesn't mean that I am for the Fed.

I am sorry if I have been abandoning any discussions; I don't live in these forums like you do.

As far as fractional reserve banking goes:
It is possible to "hold my deposit with the promise of redemption on demand and loan it out simultaneously" since banks will have to borrow money to pay me back if they don't have it on hand. How's that counterfeiting?
A bank that you deposit money into can't loan out 10 times your deposit; they can only loan out 9/10 of your deposit. That's why it's called fractional reserve banking.

 

When did the Supreme Court rule that? As far as I know, the case has not been heard.

Do you have any evidence who owns the FED?

Watch Fiat Empire. I believe both of your above quotes are touched on, perhaps addressed.

No problem. I know you are busy editing Wikipedia to limit discussion and perspectives.

I will be happy to PM you when you are absent, so when you come back you can pick up where you left off.

That doesn't address the issue of the money existing in two places at one time, does it? All we have done is shift the burden of debt from me to another lender/depositor. There is still more money available than was originally deposited.

Semantic games as usual. You know exactly what I am talking about. And regardless of the ratio, fractional, whole or otherwise, it is still counterfeit.

Hence the purpose of a gold standard. It cannot be counterfeited unless you have mastered alchemy.

 

I agree and carry that thought further: What does it promise, what does it accomplish, who pays, and who benefits?

I think the Federal Reserve is pretty independent and I wouldn't say anyone necessarily "owns" it other than the currently serving board. Question that does need to be answered is: "Who benefits"

http://www.minneapolisfed.org/pubs/region/89-05/reg895d.cfm

The Minneapolis Fed says which banks were represented at Jekyll island: JP Morgan, National City, Banker's Trust Co (one of the Rockefeller banks split off from Chase and eventually sold to Deutsche Bank). Sure, there is no evidence that the dominant monopolists of the 19th century used this legislation to create an anti-competitive environment. Its just a huge coincidence that those banks are still dominant in a much smaller poll of competition. Its also a coincidence that their grandkids are all billionaire senators & governors.

But what is a conspiracy?

A conspiracy usually involves a group entering into a secret agreement to achieve some illicit or harmful objective.

There is nothing extraordinary about that claim of the existence of conspiracy - its business as usual. The plot (a synonym for conspiracy) is simple in my opinion: Create a regulatory environment discouraging competition; Create a monetary system that could create or end panics; and create a source of public funding that does not require direct Congressional approval. All of those things are accomplished and there is no evidence that those functions have been performed objectively or neutrally or to the benefit of the general public.

 

Thank you. I know some people find conspiracies inconceivable.

I find it inconceivable that these folks believe that bad stuff isn't planned secretly.

I'm not sure if they think

1) Bad stuff doesn't exist
2) Bad stuff is spontaneous
3) Bad plans are always public.

Again, people have been socialized to reject the idea of conspiracies as being about crop circles, or lizard people under the streets.

When in reality, they could be about a 4 plane attack on the continental US, a presidential assassination in Dallas, or a secret meeting amongst wealthy bankers and industrialists to create a central bank AND income tax (as collateral for the lender of last resort) in the same year.

I mean how unprecedented is that? An income tax and a national bank in the same year. Two things the American people would have been against, and very wary about. In the same year.

 

korr, thought you might enjoy catching up on these if you haven't seen them already.

Debunking Alan Greenspan

Dr. Greenspan's Amazing Invisible Thesis
http://online.barrons.com/article_print/SB120675340444773623.html



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Lew Rockwell on Charles Goyette (Radio)
http://www.lewrockwell.com/blog/lewrw/archives/020311.html

I don't know if you read LRC, but it's a fantastic site. I struggle to get through all 10 articles every day. And the blog is pretty good too. They must have 20 or 30 blog contributors.

 

In the video there is a statement made that the Fed is a cartel run by a bunch of banks to maximum profits,

Banks in the last quarter alone wrote off $40 billion dollars in bad debt, not a very successful cartel if you ask me.

And that’s not even getting into the banks that have come and gone over the years. So it doesn’t look like the Fed is protecting its own does it.

Then they talk about the Fed printing and giving congress money, but congress doesn’t get money from the Fed. Congress gets its money from taxes and what ever its short it sell bonds on the market, which is how china owns so much of our debt.

Then they talk about the Fed being a private company, if this is true why the big fuss about the Fed/Tax payers bailing out Bear Sterns. Since when is the debt of a private company the debt of the tax payer?

Then they talk about member bank who own stock in the fed most of those banks are gone now,
Manufactures Hanover, gone
Chemical Bank, gone
Bankers Trust Company, gone
Chase Manhattan Bank, gone

AS for the major stock holders of banks, yahoo finance has a nice section of large stakeholders in companies you may want to utilize sometime.

If your going to post a video on hear, post one that is factually sound.

 

Or what? You will stop paying me? Repping me? Saying nice things about me? Combing my hair?

rotflmao

Hey, that's a Harvard Professor. You got a problem with it, I might be able to scare up his email address.

I don't think you understand the premise of the movie. The money isn't made at the bank level. It's made by controlling the issuance of money.

Debt Monetization

Now look, if you are going to talk a bunch of junk to me, I'm gunna monetize your foolishness and charge you to post silly things.