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Why We Should End The Federal Reserve - Not Just Audit Them

Updated on May 9, 2012
The "Federal" Reserve
The "Federal" Reserve

A Brief History of Money & Banking

To understand why it is in the people's best interest to end the Federal Reserve, you must first understand a little about the history of money and banking.

Throughout history money has taken many different forms - from sticks, shells, and even feathers to gold, silver, and the fiat bills printed by the Federal Reserve (as well as other central banks from around the world).

Money is basically anything that we can trade, which has the same perceived value from person to person. As long as society accepts the value of something, money could be literally anything.

It just happens that precious metals (gold and silver in particular) became the material with the most widely perceived value over time - with gold settling at the top.

Gold was destined to become the ultimate money. Eventually it became the most widely recognized and used form of money around the world, but it wasn't the most practical form of money for everyday use.

Enter the first banker. The banker devised a service in which customers could deposit their cumbersome gold in a safe place, and receive fully redeemable IOUs for their deposits - all for a small fee of course.

The IOUs where much easier to carry around, conceal, and dole out for trade. Since these IOUs were fully redeemable in gold, traders had confidence in trading these IOUs as if they were gold. Thus the first fiat money was born.

Soon after the banker noticed something very interesting. Few customers retreived their whole gold deposit at one time, and the odds that every customer would redeem all of their IOUs for gold at the same time were slim to none.

This gave the banker the idea to lend some of his customers' money out, which would be returned with interest. The grand banking scheme of making money from other people's money was born.

Money As Debt

Not content with the profits earned by lending his customers' money alone, the banker started lending more money than he actually stored. Fractional lending was born.

Again, as long as a large portion of customers didn't return to claim their gold at once, the banker could get away with it.

After suspisions started to mount, many of the banker's customers came to claim their gold. This is what is called a "run on the bank," and it's what every banker fears.

The banker was ruined. He didn't not have enough gold in his vault to redeem all of his customers IOUs. The unscrupulous activity of fractional lending should have been outlawed then.

Unwilling to part with the large amounts of credit the bankers were offering, the European government instead adopted the idea of a central bank. The central bank would be a lender of last resort - existing to prevent these runs on the banks.

As long as the system could avoid simultaneous runs on many banks at once, the credit bubble could continue.

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The "Federal" Reserve Bank

The "Federal" Reserve is one of these central banks. Beside beign a lender of "last" resort, the Fed is supposed to serve two purposes - maximize employment and provide stable prices.

Unfortunately, it does neither of those things, as evident in the unemployment rate today and inflation. In fact, since 1913 the dollar has lost about 96% of it's original value.

That's an inflation rate of more than 1% per year on average. In other words, prices are far from stable.

You may have noticed that I put the word federal in paranthesis throughout this page. That's because the "Federal" Reserve is no more federal than Federal Express.

The "Federal" Reserve bank is a private company. In fact, there are laws in place that protect the privacy of this cartel of private bankers from government oversight of any kind.

In almost 100 years since the creation of the Federal Reserve, this private operation has never once come under the scrutiny of a full audit.

Only recently, Ron Paul and some other hard working congressmen, passed a bill for a partial audit of the Fed. This brief look into the beast only confirmed suspicions, and strengthened the argument for a full audit.

Ron Paul also introduced the Federal Reserve Transparency Act of 2009, and the Federal Reserve Board Abolition Act of 2007.

Powerful banking lobbyists have worked hard to stymie all three attempts by Dr. Paul and his constituents, although his Federal Reserve Transparency Act (which authorizes the first full-fledged audit of the Fed) now has over 200 congressional co-sponsers.

The Federal Reserve Act

The Fed, as it is sometimes called, was created with the Federal Reserve Act of 1913.

After previous attempts to push the bill through Congress, a group of elite bankers funded and staffed Woodrow Wilson's campaign for President.

In exchange, Wilson agreed to pass the previously rejected bill - if he was indeed elected as President.

In 1913, the Federal Reserve Act was pushed through Congress - right before Christmas, when most of the congressmen who opposed the bill were on vacation. After being elected, Wilson passed the Fed.

Woodrow Wilson would later state, referring to the Fed, "I have unwittingly ruined my country."

Other Famous Quotes:

"I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the government at defiance. The issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs." — Thomas Jefferson, U.S. President

"History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and it's issuance." — James Madison, U.S. President

"This [Federal Reserve Act] establishes the most gigantic trust on Earth. When the President [Wilson] signs this Act, the invisible government by the money power, proven to exist by the Money Trust Investigation, will be legalized.... The new law will create inflation whenever the trust wants inflation.... From now on, depression will be scientifically created." — Congressman Charles Lindbergh, 1913

"It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." — Henry Ford

"The few who understand the system, will either be so interested from it's profits or so dependent on it's favors, that there will be no opposition from that class." — Rothschild Brothers of London, 1863

"Give me control of a nation's money and I care not who makes it's laws." — Mayer Amschel Bauer Rothschild

Should We End The Federal Reserve?

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Why We Should End The Federal Reserve - Not Just Audit Them

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    • maxoxam41 profile image

      Deforest 5 years ago from USA

      Is it a coincidence that Lincoln and Kennedy both wanted to eliminate the Fed and they died?

    • GA Anderson profile image

      GA Anderson 5 years ago from USA

      Well done. Such a simple explanation that anyone can understand it.

      Also a true description of the Fed. Unfortunately, the practice of fractional lending that started with the banks became a common practice all over Wall Street - and has led to the creation of a financial house of cards, that, although the effects of failure are believed to be too disastrous to allow, must fail before the economy will ever again be based on true value, and not just the smoke and mirrors of proclaimed value.

      Excellent quotes.

      GA

    • Chris Kross profile image
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      Chris Kross 5 years ago from Dallas, TX

      @maxoxam41 Not at all, IMO. Lincoln said that his two greatest enemies were the south and the banks, and that he feared the banks more. No doubt they wanted him dead.

      There is also no doubt in my mind that there was a conspiracy to kill JFK. The details are disputed, but the why is obvious.

    • Chris Kross profile image
      Author

      Chris Kross 5 years ago from Dallas, TX

      @GA Anderson - I totally agree. Before Andrew Jackson died, he said that his greatest accomplishment was that he "killed" the banks.

      Unfortunately, I think he would be ashamed of how much power we've given the banks today.

      Most people simply don't understand what's going on.

    • j80caldwell profile image

      j80caldwell 5 years ago

      Man great hub dude,,,,I'm in line with pretty much everything you said. And I voted for option#2, as much as I disapprove of what the Fed represents, they are, indeed, protected by an act of congress. A full audit is probably the best thing we could wish for in this generation.

    • Chris Kross profile image
      Author

      Chris Kross 5 years ago from Dallas, TX

      I agree that a full audit is the place to start. If we can get the fraud out in the open, more people will think about ending the Federal Reserve for good.

      Then again fraud is not the only problem I have with the Fed. The whole system is costly and unnecessary.

    • TashMarkert profile image

      TashMarkert 5 years ago from Sydney, Australia

      I'm from Australia and our Reserve Bank is run 100% by Government and charges no interest on money printed. I could not believe and neither could many friends I informed, including a friend from the US, that the US Fed Reserve was privately owned and charged the US public interest on all money printed. I STILL can't believe it! I saw a You Tube video recently where the author likened the US Fed Reserve to a counterfeiter that has come into town. It does not serve the people

    • Chris Kross profile image
      Author

      Chris Kross 5 years ago from Dallas, TX

      @TashMarkert - You are absolutely right. It does not serve the people. It serves the bankers under the private Federal Reserve umbrella.

      The IRS and income tax exist in order to pay off that interest on printed money. The income tax and the IRS are unconstitutional.

      The issuance of money was historically the job of Congress, according to the Constitution.

      The Federal Reserve Act was drawn up by a group of elite bankers to benefit elite bankers, and Congress was stripped of it's duties in regards to our currency.

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