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Federal Reserve

The want of money is the root of all evil. ~ Samuel Butler

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Federal Reserve - Enemy of America


Good Analysis - but NO Reform?

No other topic is more important and explains better the demise of America, than the saga of the Federal Reserve. To any objective citizen the conclusion is self evident. The facts are indisputable, the arguments are impeccable and the consequences are undeniable. So why will the public avoid facing the ultimate crisis of national survival?

If you are one of the very few who has never been presented with the evidence, the task to educate yourself has just become easy. Thomas D. Schauf, CPA

has the devoted much time and energy to this subject. In "The Federal Reserve History"

he gives the background on the private company that most Americans erroneously, still think is part of the central government. For the crowd that refuses to read or consider such accounts as valid and true, they need to review the original provisions in the Federal Reserve Act, of December 23, 1913.

The essence of this fraud has been summarized in the classic - Billions for the Bankers, Debt for the People by Sheldon Emery

But even after all this evidence, the public still refuses to face the trepidation - that they are living within a controlled economic system that is ruled by elites, while the masses pay all the bills.

The breadth of how confused the public has become and the extent of the disinformation about the cure for this treachery against the nation, is seen in the final inference by William Greider in his book, Secrets of the Temple.

"He offered to the unsuspecting public a scathing expose of the Federal Reserve System. His history was excellent, but his conclusion was treacherous. After having proven that the Fed was conceived as a weapon of the banking elite against the common man and having shown throughout his book that this is exactly the function it has always served, his conclusion was, not to abolish the Fed or even to make serious changes to it."

If people crave comfort in denial and solace in the company of weak willed citizens, America is surely doomed. There can be no intelligent debate about the merits of the Federal Reserve. It is a pure FRAUD. Fractional reserve banking is criminal. Public indebtedness, as a requirement for currency creation is the supreme Treason.

In the 70's this author was part of a group that sought a federal charter to organize a commercial bank. The ultimate benefit of becoming part of the Fed, was that the bank would attain an equity interest in the Federal Reserve. In monetary terms its value was insignificant when compared to the Chase empire. But the principle was revealing and disturbing. By what generosity of approval, does an individual merit entry into the exclusive club of the money manipulators? The project was withdrawn on moral grounds.

The last vestige of the Republic was lost when the Federal Reserve was enacted. If you don't understand why the battle over Alexander Hamilton's plan for the first central bank, was so important, you will never be able to comprehend that this struggle goes to the very nature of our country. Andrew Jackson is an America hero because he opposed a fiat currency of an all powerful central government. But the depths of deceit even extends into the corridors of that government, for public tribute must be paid to the private owners of the Fed. How could any honest American defend this system?

At the core of the enforcement process that protects the entire Federal Reserve swindle are the legal tender laws. From the Federal Reserve Bank of Cleveland site:

"Legal tender laws require that residents of a country accept payment in that country’s currency even if the contract stipulates payment be made in another country’s currency, gold, bales of hay, or whatever."

Again this author had the experience of a court ruling in his favor on a contract for Specific Performance. Specific performance legislation means that courts must require delivery of exactly what was promised in a contract. However, when it comes to adjudicate conflicts and disparities with legal-tender laws, the Federal courts require adherence that federal reserve notes must be accepted as payment for all debts and transactions, public and private. Without the compulsion of court protection the Federal Reserve would fall like a house of cards.

So why does the America public continue to wear the chains of serfdom so willingly? The answer is obvious. The citizens of this great land don't deserve to be called Americans! They have become hollow tools of the insidious propaganda that tells them that your own property is really not yours. They have accepted their status as slaves to a money racket that destroys their lives and relegates them to a hopeless future. But their greatest sin is that they embrace the mythology in this satanic religion of an unconstitutional money monopoly.

In the name of a contrived "war on terror" the populace is flocking to relinquish their natural rights. But even in times of peril, are we suppose to ignore the biggest domestic Ponzi scheme? This one dwarfs the Social Security scam in both scope and depth. When new debt is necessary to issue additional currency, any increase in the money supply adds to a liability that can never be retired. Do you dare take the Money Quiz?

By comparing the purchasing power of money in the United States (or colonies) from 1665 to any other year including the present, you will be provided with the empirical evidence that so many wish to scorn. Here are the results - the real value of $100.00 in 1913 reflected in Federal Reserve Notes, for the year 2001. Now compare how many U.S. Dollars it took in 1913 to have the same worth as $100.00, of real constitutional money, in 1776:

1. $1779.93 in the year 2001 has the same "purchase power" as $100 in the year 1913.

2. $113.33 in the year 1913 has the same "purchase power" as $100 in the year 1776.

Case closed . . .

It is easy to appreciate why the greed for money and the lust for power devised this corrupt deception on the American public. What is difficult to understand is why the people are so timid to demand the replacement of a monetary system that keeps them in perpetual bondage?

Thomas Jefferson was concise in his early warning to the American nation, "If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered."

So tell me, is the Federal Reserve a friend or foe of America?



The Birth of Legal Counterfeiting
by George F. Smith

"Centralization of credit in the banks of the state, by means of a national bank with state capital and an exclusive monopoly." -- Fifth plank of the Communist Manifesto, 1848

Crisis has been very good to government growth.  It happens this way: the central government never does wrong, yet the evil that lurks in the world will on occasion strike us.  Sometimes the evil is external, as in 9-11, other times it is internal, as in the case of certain economic upheavals.  When the crisis is mostly economic, the culprit is always the private sector, and the guilty parties are usually big shots who got swept away with avarice.  With a lapdog media clamoring for "reform," politicians pass more laws and flood the airwaves with rhetoric about how their new legislation will crush the forces of greed.  Most of us then go about our business, hoping that causality is not an avenging angel.

In the era following the War of Secession, the federal government aggressively promoted development of the West through huge subsidies and other favors to business cronies.  Corruption flourished, and overextended banks occasionally failed, causing panics in 1873, 1884, 1893, and 1907.  Throughout this era there was growing opposition to sound money, eloquently expressed by railroad speculator Jay Cooke in 1869: "Why," he asked, "should this Grand and Glorious country be stunted and dwarfed--its activities chilled and its very life blood curdled by these miserable 'hard coin' theories--the musty theories of a bygone age." [1]

The Panic of 1907 is especially significant because it led to government-directed banking "reform."  The panic got underway when United Copper's stock price collapsed.  Knickerbocker Trust of New York had invested heavily in United Copper, and depositors made a run on the bank to get their money out.  When Knickerbocker failed, depositors at other banks got nervous and demanded their money, igniting the panic. [2]

J. P. Morgan got together with other banking leaders and met virtually nonstop for three weeks to solve the crisis.  They secured credit from foreign investors, redirected funds from strong banks to weak ones, and bought stock in foundering but still promising companies.  [3]  The panic died a few weeks later.

For the New York bankers, there remained a much more serious problem.  The growth of state banks over the previous 20 years had slowly eroded their power.  By 1896, state and other nonnational banks constituted 61% of the total, and by 1913, 71%.  More significantly, nonnationals commanded 57% of banking resources by 1913.  [4]

With such a troubling trend, what did the New York bankers do?  They turned to their pals in Washington.  As we've seen, from the time of Lincoln's administration government sought to partner with business, delivering special favors in return for political support.  This is mercantilism, the system we rejected in 1776.  By the early 20th century, we were neck-deep in Progressive propaganda, and there was no viable group opposing government takeover of our lives.  The once laissez-faire, sound-money Democratic Party died with the nomination of William Jennings Bryant for president in 1896.  From that point on, both Republicans and Democrats were promoting more statism as the miracle cure for ills it had breeded.

Both Congress and the American Banking Association had been pushing for central banking since the 1890s.  The Panic of 1907 gave them another excuse to go after it.   Amid all the maneuvering and proposals, Morgan banker Henry Davison organized a duck hunting trip at Jekyll Island, Georgia in December, 1910.  The ducks they took aim at were not the web-footed kind, but the unsuspecting American citizen who had always thought of money as gold.

The hunters were major players in American mercantilism: Senator Nelson Aldrich (R., R.I.), who had headed up the National Monetary Commission, a congressional committee dedicated to developing ideas for central banking; Frank Vanderlip of Rockefeller's National City Bank; Paul Warburg of the investment firm of Kuhn, Loeb, & Co., who was there to promote the German central bank of Bismarck; Charles Norton of First National Bank of New York, a Morgan company; and Davison, a partner of J.P. Morgan's.  [5]

They devised a plan whereby a board of commercial bankers would supervise regional reserve banks.  When Aldrich later introduced it to Congress, Democrats blocked it.  In 1913, Carter Glass, a Democratic congressman from Virginia, used the Jekyll Island scheme as the basis for the Federal Reserve Act.  [6]

The Act created 12 regional reserve banks ruled by a board of Washington bureaucrats, including the Treasury secretary and presidential appointees.  Though the 12 reserve banks are officially "private" institutions, they're little different than government agencies, as Murray Rothbard noted.

In this manner government seized what Rothbard called "a crucial command post" of the economy, and therefore of the American society.  [7]  It used crisis -- repeated panics created by government meddling -- and the economic illiteracy and trust of the public to achieve its purpose.

And what has it sown from its command post?  A subtle means of wealth transfer.  A method of taxing us without legislation. A way of counterfeiting money legally.  "Through the purchase of [usually government] debt by a bank, fiat money is injected into the economy," Gary North writes. [8]  "Wealth then moves to those market participants who gain early access to this newly created fiat money," who are usually politically connected. The ones on fixed incomes or without close government connections bear the cost of higher prices later, as the money injection passes through the economy.

As most people know by now, the Fed greatly reduced reserve requirements during the 1920s, expanding credit recklessly and generating a false prosperity that ended in the crash of 1929.   People understood that the Fed was manufacturing dollars out of thin air and started to pull their money out of banks, converting them to gold.  Roosevelt closed the banks, then announced it was illegal to own gold.  He forced people to give back to the Fed what was rightfully theirs.  In 1933 Roosevelt made the dollar fiat currency domestically, but backed by gold internationally.

Roosevelt also created the Federal Deposit Insurance Corporation (FDIC) in 1933, providing federal guarantee of bank deposits.  Bank runs and the threat thereof have vanished, and most people believe this is good.  But as Lew Rockwell observes, "The government-banking cartel regards the bank run--the threat of which used to keep wanton investing at bay--as against the national interest.  As a result, the industry is perpetually shaky, and the largest banks are a menace to public life itself." [9]

Prior to 1929 the government had never intervened to help recovery from a recession.  Previous administrations had let recessions run their course and recovery, at the hands of the market, usually occurred in a year or less.  Hoover, and  then Roosevelt to a much greater degree, took the statist course and drove the economy into a prolonged depression.  For this, Roosevelt has been deified.

The Fed is the keystone of government wrong-doing.  As Ludwig von Mises wrote long ago, "Ideologically, [sound money] belongs in same class with political constitutions and bills of rights."  [10]  In the name of civil liberty and civilization itself, the Fed should be abolished.


1.  The Mystery of Banking, Murray Rothbard, New York: Richardson and Snyder, 1983. p. 135. (PDF version)

2.  Separating Money and the State, Part I: Eighty Years of Destruction, Douglas E. French,

3.  The Panic of 1907 and the Birth of the Federal Reserve, Jim Klann, 4.  Rothbard, p. 136.

5.  Rothbard, p. 137.

6.  French

7.  Taking Money Back, Murray Rothbard,

8.  Rothbard, Mystery of Banking, Forward by Gary North.

9.  Banks on the Dole, Llewellyn H. Rockwell, 10.  The Theory of Money and Credit, Ludwig von Mises, Yale University Press, 1953, p. 414.

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