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9 Really Interesting and Shocking Things That Every American Should Know About The Federal Reserve System Right Now

Updated on August 10, 2014

You know about the Federal Reserve System right?

You know about the Federal Reserve System right?

That is the institution that creates money out of thin air and provides liquidity to the Federal Government for its fiscal needs and wants.

And it does so unilaterally without the permission or approval of any government body!

This institution was created out of thin air in the early 20th century by the money lenders behind it and ever since then this scam has been perpetrated on the American government and the American public for more than 80 years. The Federal Reserve or "Fed" as it is colloquially called is the money lender to the American government and it satisfies the demand for money simply by "printing money" whenever it is required.

There is no gold backing the printing of this money and its effectiveness is entirely dependent on the creditors willing to accept payment in American dollars for services rendered. If the public or the banks ever decided to question the value of the money being received in settlement of debts, the entire financial system would implode on itself and collapse from under its own weight. If anyone ever begins to question in large measure the purchasing power of the dollars being printed by the Fed then the entire American economy as we know it now would instantly cease to exist.

Money exchanging would cease. People being paid in dollars would stop. Companies would not be willing to accept the American dollar in payment of their bills. Foreign countries would insist on something other than dollars to settle American debts with them.

The acceptance of the American dollar as legal tender in payment for all debts, public and private as they are called would be discontinued and the economy would grind to a halt. With creditors insisting on being paid in gold [which the US does not have in sufficient supply] rather than American dollars, the entire economy would grind to a halt resulting in massive unemployment, sever hyper-inflation, shut down of the American government services, bankruptcy of corporations, State governments and individuals on a scale that no one can ever possibly imagine. Interest rates would soar to unimagined heights as the scarcity of "money" was manifesting in the both the American and the global economies.

What would happen if the Federal Reserve was shut down permanently?

CNBC recently posed that question, but unfortunately most individuals aren't aware of what the Fed is, let alone what it does, or what it would mean if it did not exist. Most Americans who remotely even ponder the Fed believe that it is simply a stodgy government agency that sets interest rates and influences the flow of money from banks to corporations to individuals. But nothing could be further from the truth.

The Fed is simply a private banking cartel that has systematically over its long history destroyed the value of the American currency, sucked the wealth out of the hands of private individuals and corporations and has enslaved the federal government to ever increasing and higher levels of private and international debt that it can never hope to repay, at least not without defaulting or bankruptcy. The Fed has more power over the American economy through its enslavement of the politicians and control over how they and their parties vote on any critical matter before Congress of the House of Representatives that they can literally control the politicians and each party without even any direct control or influence in that regard.

The Fed controls the money supply [if you believe that "money" is dollars], sets the interest rates and also provides huge bailouts to big banks that dwarf anything that Congress ever did, or could do. The Fed does everything in isolation, when it wants, and how often it wants, so long as it suits their needs.

As an American citizen you should be aware of the characteristics of the Fed as they have direct impact on you, your job, your wealth, your business, and your future.

So, here are10 things that you must know about the Fed:-

1. The Fed is not a government agency, it is a private banking cartel.

In essence, it is a privately owned central bank, owned by the member banks that are part of that system. The exact percentage ownership of each member bank is never disclosed to the public at large as it is a closely guarded secret. The Fed even declares publicly that they are not subject to the Freedom of Information Act and therefore not subject to the demands for information from Congress. The Fed has 12 regional banks that were established by Congress as operating arms of the country's banking system and are in fact organized as private corporations that issues stocks to its member banks and directors. Unlike shares in regular private corporations these shares cannot be bought or sold, or traded, and the return on them is set at 6 % annually.

2. The Fed can bail out whomever it chooses.

The Fed has made trillions of dollars in loans and bailouts to Wall Street firms that number in the dozens, "loans" that will probably never be repaid. In all, more than $ 16 TRILLION were "loaned" to 21 banking institutions during the post meltdown crisis that started in October 2008 that resulted in these banking institutions being bailed out of insolvency situations.

3. The Fed pays banks to NOT lend money.

After the financial crisis of 2008, the government passed a law known as the "Emergency Economic Stabilization Act of 2008" that enables the Fed to pay interest on what are termed "excess reserves" of banks on deposit with the Fed. When the banks park these "excess reserves" - $ 1.5 trillion since 2008 - with the Fed they just sit back and watch their money roll in, risk free! The implication of this is that the money the banks have on deposit with the Fed, is money not available to them to lend out to people in the form of mortgages and other loans, which is what banks should be doing. In this regard, the Fed is working not for the American people but for the banks! This is a drag on the American economy and the opportunity cost of this practice is missed jobs, missed corporate expansion and reduced economic activity. And most Americans do not know anything about this practice.

4. The Fed is a perpetual debt machine that is out of control.

The US government debt will continue to increase unabated as long as the Fed exists! And this is contrary to the pronouncements of the politicians who would continually have us believe otherwise.

The essence of this system is simply that when more money is created [out of thin air], more debt is created as well. When the Federal government wants to spend more money than it has on hand - which is always the case - it must ask the Fed for it. The process works as follows: the Fed gives the government "Federal Reserve Notes" [money in denominations of $1,000 dollar bills] in exchange for US Government Treasury Bills or Bonds and the entire process is done electronically with no actual "paper" being exchanged.

You may be wondering where does the Fed get these "Federal Reserve Notes"? It just simply creates them out of thin air. It prints them with a printing press! When this new debt is created there is no provision for the creation of the interest payable on that additional debt, so how does the US government find the money to pay the interest payable? You got it - it has to go to the Fed to get more notes and issue them more Treasury Bills or Bonds and the process repeats itself ad nauseum, in perpetuity. This debt spiral is the subject of the recently completed "fiscal cliff" discussions that dealt with the ever expanding "debt ceiling" that everyone was preoccupied with in the early days of 2014.

The history of the US debt ceiling is one of starting from a level of $ 1 BILLION to its most recent level of $ 17 TRILLION and which closed the American government for two weeks in late February 2014!

This debt spiral is designed to rise uncontrollably and as the money supply under this system is constantly expanding under the watchful eye of the Fed. That is why Americans are used to thinking of the resultant inflation as "normal".

You might be wondering what the Fed does with these US Treasury Bills that it gets? It sells them to others! In 2011 alone the US government paid in interest the staggering amount of $ 454 BILLION to holders of US Treasury Bills! That is money removed from the control of the wealth creators in the economy along with the residual effect of job creation and other like stuff. When the Fed was created the US national debt was only $ 2.9 billion, whereas in mid 2014, only 100 years later it is more than 5,100 times larger!

The perpetual debt machine is revved up and roaring along, more than 100 years later. Imagine what the number will be in 3014, only 100 years from now. The majority of Americans have no clue what is going on here.

Any prognosticators reading this article want to hazard a guess?

Would you like to be able to create legal tender money out of thin air? I thought so!

5. The Fed has destroyed more than 90% of the value of the American dollar.

Given the numbers quoted above, it is not surprising to learn that the Fed has destroyed more than 96% of the value of the American dollar since 1900.

Our dollar will continually lose its remaining value over time given that the money supply is constantly expanding. The decreasing value of our dollar over time has resulted in inflation, that has been called a "hidden tax" that continually robs us of the value of our paycheck, our homes, our wealth and all of our assets. When you read that the Fed is committed to reducing inflation, understand that it is not in its interest to do so, therefore it never will, despite what it says publicly.

6. The Fed is dominated by Wall Street banks.

The Federal Reserve Bank of New York is and has always been the most influential of the regional member banks and that member bank has been in turn dominated by Wall Street. Therefore, the directors of the Wall Street banks control and influence the Fed and every decision it makes. Whose interests do you think the Fed is therefore protecting?

7. The Fed regularly creates artificial economic crises that can cause extreme damage.

The Fed, by dictating interest rates and their levels, also causes financial bubble after financial bubble due to their keeping the interest rates artificially low. The history of the American economy is one of one financial crisis after another as it tries to adjust to the artificial and never-ending manipulations of the Fed in pursuit of its own interests. Starting with the Great Depression in the early 30's and right up to the financial crisis of 2008 in more recent times, the crises we have seen would not have been so severe if the Fed had not interfered in the dictating of interest rates and economic conditions but rather to let the market determine economic factors and conditions.

By allowing the Fed to set and regulate interest rates we pay the price as an economy both today in terms of reduced economic activity but also in the future as our descendants will have to deal with the decisions made today and the consequences of those decisions.

8. The taxes on personal income were introduced in 1913, the same year that the Fed was created.

One can argue that without a personal income tax, a central bank could not exist. Yet the Fed and personal income taxation came into existence in the same year. The federal government requires huge and increasing amounts of money in order to feed itself: to pay wages, pay pensions, unemployment benefits, the armed forces, capital expenditures such as bridges, roadways, schools and other infrastructure, not to mention the interest on the national debt that now exceeds $ 17 TRILLION. A Central Bank can create that liquidity that a government like ours needs. So, why not create both in one year, as was done?

If our grandchildren has any say in our decisions today, does anyone think that they would agree to our mortgaging the future - and have them pay the principle - in order for us to live "better" today? I think not.

So, in effect we have enslaved them to a lifetime of debt that we have created and which they can never hope to repay.

9. The Fed has become overbearingly powerful and far too imposing in our lives.

Now known as the "fourth branch of government", the Fed has become far too imposing in our lives and far too powerful.

Does anyone not find it ironic that the Fed runs the American economy but it is not accountable to the American people either through Congress of through the House?

The bankers running the Fed are not elected civilly. They are appointed by the President. If he does not appoint the ones that Wall Street wants, he won't get from Wall Street the money he needs to be re-elected. And so the cycle continues.

If the founding fathers knew how far we have slipped into this financial abyss they would surely turn in their graves.

Are you concerned?

You should be, the future of your job is at stake.

End The Fed - Do You Know Why?

9 Really Interesting and Shocking Things That Every American Should Know About The Federal Reserve System Right Now...But Probably Doesn't

1.The Fed is not a government agency, it is a private banking cartel.

2. The Fed can bail out whomever it chooses.

3. The Fed pays banks to NOT lend money.

4. The Fed is a perpetual debt machine that is out of control.

5. The Fed has destroyed more than 90% of the value of the American dollar.

6. The Fed is dominated by Wall Street banks.

7. The Fed regularly creates artificial economic crises that can cause extreme

8. The taxes on personal income were introduced in 1913, the same year that the
Fed was created.

9. The Fed has become overbearingly powerful and far too imposing in our lives.

How The Fed Works!

The Financial Crisis Explained!

The End of America As We Know It!


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    • my_girl_sara profile image

      Cynthia Lyerly 

      4 years ago from Georgia

      Nice blog. Lots of detail. Most of it I've heard/read before but the part about the income tax beginning the same year as the Fed was created was a new one for me.

    • gmwilliams profile image

      Grace Marguerite Williams 

      4 years ago from the Greatest City In The World-New York City, New York

      Great article, it is TIME to END the Federal Reserve as it is a socioeconomic eyesore to America.


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