(Revised long version)
Complete proof of an article posted by me concerning inflation
was demanded by a participant in the UWSA newsgroup on Fidonet.
Well, here it is:
This article/proof can be edited, quoted, crossposted, printed,
published in a newsletter or any other form by anyone who chooses
to do so. You don't have to credit me as being the source. My only
hope is that this information reach as many people as possible.
THE EMPERORS NEW CLOTHES
An article by Paul Hanson
in.fla.tion:NOUN 1. The act of inflating or the state of being
inflated.
2. ECONOMICS An abnormal increase in available
currency and credit beyond the proportion
of available goods, resulting in a sharp
and continuing rise in price levels.
(emphasis added)
The above definition comes from the American Heritage Dictionary
On-line at the Beaverton, Oregon public library. If you look it up
yourself, don't use just one dictionary, use many. ALL of them that
I've checked basically match the one given here. IF the above
definition of inflation or any definitions with similar wording
are incorrect, which they aren't, someone should inform the editors of these dictionaries of the true definition of inflation.
I would like to prove the above definition by using an analogy
I once read. This definition will also be proven by other evidence
provided later. I have added a few more comparisons to todays
economy and am not quoting the original directly:
A fairly isolated and primative island community has a flourish-
ing local economy and uses seashells as a medium of exchange. Not
all seashells are the same, and some types are not as plentiful as
others. The rare and beautiful seashells can be exchanged for more
goods and services than common ugly ones. This is very similar to
our different denominations of federal reserve notes.
The seashells are also used for things like horns, bowls,jewelery, are crushed and used as sparkling body paint during tribal
rituals ect... This compares to our use of gold and silver for
jewelery, money (once apon a time), industrial purposes ect...
The seashells that are removed from circulation this way, are
replaced by collecting new shells washing up on the beach. This
would be comparable to the mining of precious metals.
Over the years, the amount of shells washing up on the beach
averages out and remains fairly constant as does the amount taken
out of circulation each year. For the purposes of this analogy,
we'll say that the amount added each year roughly equals the
amount removed. With this being the case, as more goods and services are produced (a growing economy, caused by population growth,
desire for an improved lifestyle and good ol' human ingenuity) the
seashells will increase in value. This is simple supply and demand ecomomics. This also shatters the myth that economic growth
(a so called "hot" economy) causes inflation or that you can't
have economic growth during a deflationary period. The islanders
will still need goods and services and will just make do with the
seashells at hand. The seashells will just increase in value to
balance out the rise in the level of goods and services.
Early one morning an industrious family of insiders, oops, I
mean islanders, let's call them the Warburgs, decide to paddle
out beyond the horizon in some outrigger canoes. Around noon or
so they spot another island off in the distance and decide to
check it out. When they reach the island they discover it is uninhabited and the beaches are loaded with seashells. The Warburgs
are shocked at first and then suddenly realize their good fortune.
They formulate a plan on this island, we'll call it Jekyll
Island, to sneak the newly discovered seashells ashore on the home
island and stash them away. Next they plan to set up a seashell
bank and introduce the new shells into circulation. This will have
to be done slowly so they won't draw too much attention to themselves. They also made plans to return to Jekyll Island often and
collect more shells.
When the Warburgs returned to the home island, they carried out
their plans and became very wealthy.
Well, the effects of the Warburgs actions slowly became obvious.
Each year as more and more seashells were put into circulation,
they became very common. Merchants and laborers began to demand
more for their goods and services because the seashells were less
rare and had lost value. The seashells were eventually no longer
used as jewelery (the men and women used to wear them to show
wealth). In order to show any amount of wealth now, the necklaces became so heavy they would break or the people would become
top heavy, loose their balance and tip over. The economy of the
island was ruined.
What happened on this small island is happening in America
today. We have had yearly inflation for a long time. Some years
more inflation, some years less. But it remains persistent.
What's caused the inflation? An increase in the amount of
currency (seashells). This is proven by the definition given
earlier and the above analogy. It'll also be proven by a chart
which I will show later.
With all of the above in mind, I would like to point out some of
the flaws in the theories on inflation held by most economists
today. I would also like to shine the light of day on some of the
propoganda issued by the Federal Reserve System and its apologists.
Let's start off with some little known facts about "our" Federal
Reserve System.
1.) Even though it carries the name "Federal", It is actually
privately owned. This can be verified by calling them at:
202-452-3000 and asking this question:I would like to know
the names of the 4 leading class A stockholders in the
Federal Reserve System?
Call them and ask. I did. I was told that no one in the PR dept.
was able to answer my question at that time. I was told they were
"out to lunch". This was at 2:00 P.M. E.S.T. Lunch? At 2:00 P.M.?
I guess there really is such a thing as "bankers hours".
If it really were a government agency, anyone who answered the
phone there could have told me "government agencies don't sell
stock!"
Update: I have called them three times and left a message for
the person who could answer my questions. I made arrangements with
them to have him return my call at his convenience. It doesn't
surprise me that he has not returned my call. He was supposed to
call me on Wednesday June 29th, 1996 at 9:30 e.s.t. I'm still
waiting.
I have been told that this information on "class A" stockholders
is not released to the general public and they will probably say
so. However, I don't need them to tell me so because written proof
that there are stockholders is contained in the Federal Reserve Act
as codified into law. It appears in Title 12 USC (United States
Code) Chapter 3 Subchapter VI sections 281-290. Stock is purchased
at a fixed rate of $100.00 a share (sec.287). No individual, Co-partnership, or corporation may own more than $25,000 worth of stock
(sec.283).
This guarantees their permanent monopoly. The privately
held stock is also transferrable (sec.283). Banks who become members
in the Federal Reserve system are required by law to convert 6% of
their assets to Fed stock (sec. 282). The law also guarantees the
stock holders an annual fixed rate of return of 6% on their investment (provided that all the Feds bills are paid first) (sec.289). I
would assume then that the $25,000 figure must apply only to
private citizens and not to member banks of the Federal Reserve
System since that would prevent any bank with assets in excess of
$416,000.00 from becoming members. Since when is a private citizen
allowed to buy stock in a government agency? (U.S. bonds are not
stock).
The Fed also pays postage. Government agencies don't. I can't
reproduce a postmark here but it's very easy to check by writing
them a letter asking questions that require a response.
The Fed branch banks also pay state and local taxes on real
estate. Title 12 USC Chapter 4 subchapter I section 531 states:
" S 531. Exemption from taxation,
Federal reserve banks, including the capital stock and surplus
therein and the income derived therefrom, shall be exempt from
Federal, State, and local taxation, except taxes upon real
estate." (emphasis added)
Agencies of the federal government don't pay real estate taxes.
They don't pay property taxes for the use of the land where federal buildings are located. Why does the federal reserve need a special
tax exemption written into law anyway? Isn't tax exempt status
automatic for a government agency? All of these laws fly in the face
of standard procedure for a government agency and proves that there
are stockholders.
2.) It has never been audited by an independent source. Oh
sure, they may have counted pencils and office furniture
but the way our money is handled has never been audited.
Proof of this is contained in two articles I found. The first
in The Wall St. Journal Dec.10 '93 pB5B western edition and p A7B eastern edition. The title is: "Fed's Audit System Needs Big
'Revisions,'Inspector General Says" I won't quote the entire
text but I'll quote enough to prove my point.
"The Federal Reserve's system for auditing its 12 reserve
banks is too cozy and needs 'major revisions'....
The problem...is that the Fed's Division of Reserve Bank Operations and Payments Systems is responsible both for the day-to-day oversight of reserve banks and for auditing them. This dual
responsibility doesn't meet impartiality standards established
by the American Institute of Certified Public Accountants, according to the Fed's inspector general, Brent Bowen.
'We believe there is an appearance of a lack of independence,'
his report says. It proposes that the Fed either fully segregate
the audit program or hire an outside auditor."
(Emphasis added)
The report cited in this article is from the horse's mouth,
the Fed'S own inspector general Brent Bowen, and clearly states
that the Federal Reserve audits itself.
The second article that proves a lack of auditing from an independent source was found in the Christian Science Monitor June
8, '93 p.20 column 3. The title is "Reforming the Federal Reserve." It was written by Representative Lee H. Hamilton (D) of
Indiana. Again, I won't quote all of the article here for the
same reason I gave above.
Text:
"...It (Congress) should also enact long-needed reforms in the
Washington institution that controls monetary policy: the Federal
Reserve.
The health of our economy and the strength of our nation are
strongly influenced by fiscal and monetary policies made in Washington. Those who decide fiscal matters--the president and Congress --are accountable to the voters. When Congress debates policy, -
it does so in the open. The decisions we make are immediately reported to the American people.
Every penny the government spends is subject to audit and review
by the General Accounting Office (GAO). But the Federal Reserve is
not held to the same standards. It does not conform to the normal
rules of government accountability. Its decisions are made in
secret and revealed only after long delay. It is not required to
consult with Congress or the White House before setting money-supply or interest-rate targets.
...And even though the Fed engages in more than $1 trillion in
in financial transactions each year, most of these are exempt from
GAO audit."
(emphasis added)
Part of what Hamilton wrote also helps prove the next point
made in this article. I feel that Rep. Hamilton is has
the credentials necessary for his statements above to be beyond reproach. He's chairman of the Committe on Foreign Affairs of the
U.S. House, co-chairman of the joint Committe on the Organization
of Congress, and the former chairman of the Joint Economic
Committee and a member of the Council on Foreign Relations, which
I have more to say about later.
3.) The Federal Reserve doesn't answer to anyone but itself.
Congress, which created the Fed, can't direct it's
actions.
The World Book Encylopedia 1993 edition had this to say on the
the totally independent actions of the Fed:
"The Fed gets no funding from Congress. It raises all its operating expenses from investment income and fees for its services.
It pays no interest to banks on cash reserves banks keep at the
Fed. The Fed reports to Congress about its proposed policies but
is LEGALLY FREE to make its own policy decisions."
(Emphasis added)
World Book Encylopedia, 1993 edition volume F p.66
4.) The only control our government has is in the selection of
the board members. This control is excercised by the President. However, once board members are appointed, they serve
14 year terms. This timespan will outlast any two terms of
one U.S. President and 1 1/2 terms of another.
The source for this information comes from World Book Encylopedia,
1993 edition volume F p.65:
"The Board of Governers administers the system. It has seven
members. Each member is appointed by the President of the United
States to a 14 year term, subject to the consent of the U.S.
Senate."
A large majority of the appointees to the Fed's board of governors
are members of the Council on Foreign Relations, and come from the
New York banking community:
Alan Greenspan, current Chmn. Federal Reserve Board of Governors, current Chmn. Federal Open Market Committee, member of The
Council on Foreign Relations and a former member of the Trilateral Commission.
A. William Reynolds, current Chmn. Fed bank Cleveland and a member of the Council on Foreign Relations.
Ellen V. Futter, current Chmn. Fed bank New York and a member of
the Council on Foreign Relations.
Robert P. Forrestal, current Pres. Fed Bank Atlanta and a member
of the Council on Foreign Relations.
E. Gerald Corrigan, former president Fed bank New York, former
Vice Cmmn. Federal Open Market Committee, and a member of the
Council on Foreign Relations. Corrigan was succeeded by William
J. McDonough on 19 July, 1993.
William J. McDonough, current Pres. Fed bank New York, Vice
Chmn. Federal Open Market Committee, and a member of the Council
on Foreign Relations.
Paul A. Volker, former Chmn. Federal Reserve Board of Governors,
member of the Council on Foreign Relations and the Trilateral
Commission.
Richard N. Cooper, former Chmn. Fed bank Boston, member of the
Council on Foreign Relations, and the Trilateral Commission.
Bobby R. Inman, former Chmn Fed bank Dallas and a member of the
Council on Foreign Relations.
Robert F. Erburu, former Chmn. Fed Bank San Francisco and a member of the Council on Foreign Relations.
This list is not all inclusive but I think I've made my point.
Source: Council on Foreign Relations Annual Report '91-'92.
Much of the Information given in statements 1-4 of my original article came from from James Perloff's "The Shadows of Power: The
Council on Foreign Relations and the American decline" p24. This
book is an excellent source of information on the Council on Foreign
Relations mentioned in #4.
Since I have vindicated the section in Perloff's book on the
Federal Reserve through independent research, it would appear that Perloff's work merits further study. His book is extremely
well documented with over 3OO footnotes for less than 170 pages of
text. For more evidence of this, I would like to add some excerpts from the forward to Perloff's book, written by U.S. Congressman James Jefferies (ret.) and also some endorsements by
prominent American citizens.
"There is good news and there is bad news. The good news is,
this book has been written. The bad news is, it's true.
Certain people in high places are going to dispute the validity
of this book, they will probably try to discredit it, because
they have a vested intrest in concealing their activities and
agenda.
But I encourage anyone who reads 'The Shadows of power' to note
its PAINSTAKING DOCUMENTATION. This is no opinion piece; it is an >
assembly of hard FACTS that state their own conclusions.
You can check information in this book against its sources,
which are noted. One thing I find interesting is that its revelations are not new. They have always been availible-but available
like a news story that is tucked under a small headline on page
183 of a Sunday newspaper...And though it may mean microfilm, you
can obtain access to the old 'Congressional Record'. Lots of powerful stories are buried there, and I mean buried, because the
mass media ignored them.
...It has been said that 'those who do not know the past are
condemned to repeat it.' But how can we truly understand an incident in our American past if we are confined to the headline
version...'The Shadows of Power' has resurrected eight decades of
censored material. Don't let anyone censor it for you now. Read
the book and decide for yourself its merit. Your outlook, and
perhaps your future itself, will never be the same"
(emphasis added) James E. Jeffries
United States Congressman (Ret.)
Endorsements:
An eye opening account of a private group that has helped shift
American foreign policy away from Americas best interests. Highly
recommended.
David B. Funderburk
Former U.S. Ambassador to Romania
Policies linked to the organization described in this book have
helped visit a number of tragedies on the free world. There may be
more forthcoming. James Perloff has cut through a litany of myths
to bring out the facts. To not read this book is to live dangerously.
Philip Crane
United States Congressman
If we want to avoid the disaster of one world government, If we
wish to preserve our priceless national sovereignty and live
through all time as free men, then it is imperative that the
American people read "The Shadows of Power".
Meldrim Thomson, Jr.
Governor of New Hampshire (1973-1979)
The forward appears on pp.vii & viii. The endorsements appear
on the back cover.
According to the definition given at the beginning of this article, the Fed has been the sole source of inflation since it's
inception. They have exclusive control over the supply of money
and credit in this country. The Fed excercises this control in three
ways:
1) By controlling interest rates
2) The actions of the "Open Market Committee" which is involved
in the buying and selling government securities.
3) By controlling member banks reserve requirements. Todays banks
practice what is known as "fractional reserve banking". I have
much to say on this subject but will save it for another article. This system is dishonest and if the whole truth were
known, it is very possible that a major run on the banks would
occur and the house of cards would fall.
This Information can be found in the "World Book Encylopedia" ,
1993 edition p.66 under section "Federal Reserve System". This
information can also be found in Title 12 USC sections 229 and
following.
By increasing the money supply, the Fed is causing the inflation!
Here's the indisputable proof! Taken from the "Encylopedia
of American economic history". printed 1980, Carles Scribner's
Sons:
"...The quantity theory (of money supply) asserts that a fairly
regular relationship exists between the nominal stock of money
and the level of national income, This relationship can be
written as (1) M = k x P x y where M is the stock of money, k
is the proportion of nominal income held as money, P is the price
level, and y is the level of real income. If logarithms are taken and the resulting equation is then differentiated with respect
to time the resulting equation is . . . .
(2) M = k + P + y where a dot
over a variable indicates its percentage rate of change. .
This equation is always true in the tautological sense that a k
can be found to equate both sides of the equation.
TABLE 1
Long-Term Trends in the Stock of Money and Related Variables
=================================================================
Annual Percentage Rate
of Growth of
__________________________________________________
Ratio of
Stock of Real Money to
Money Prices GNP Nominal GNP
. . . .
Period (M) (P) (y) (k)
__________________________________________________________________
1890-1978 6.11 2.53 3.24 0.34
1890-1913 6.04 0.82 3.97 1.25
1913-1923 8.44 5.33 2.33 0.78
1923-1929 4.03 -0.23 3.41 0.85
1929-1939 0.56 -1.58 0.28 1.86
1939-1948 12.23 6.79 4.84 0.60
1948-1967 4.24 2.05 3.87 -1.68
1967-1978 8.51 6.11 2.76 -0.36
_________________________________________________________________
Sources: 1890-1967 U.S. Bureau of the Census, 'Historical Statistics of the United States, Colonial Times to 1970'; stock of
money, part 2, series X 415, p. 992; prices, part 1, series F5 p. 224; real GNP, series F3, p.224. Data for 1967-1978 are from the
'Federal Reserve Bulletin'.
Note: Money is defined as currency plus demand and time deposits
in commercial banks. The price index is the GNP deflator.
...During the period 1890-1978 the money stock grew at an annual
rate of close to 6%. This rate was distinctly faster than the
growth of real output....Over the period 1890-1978 this ratio
grew at 2.87% per year (6.11-3.24). What has been the effect
of this increase?...The positive k of 0.34 indicates that the
economy has tended to increase the proportion of nominal income
held in the form of money....But the offset provided by a positive k HAS BEEN SMALL.
The rising trend in money per unit of output has produced a positive LONG-RUN INCREASE IN PRICES AT THE
RATE OF 2.53% PER YEAR." (emphasis added)
The Author of this section "Money Supply" of the encylopedia
speaks of the "quantity theory of money." I say it is a fact.
The numbers speak for themselves. They cleary indicate a DIRECT
relationship between the increase in the supply of money and the
resultant rise in the general price level. The Fed has caused the
inflation. This fact should be painfully obvious to anyone who has
opened a dictionary and checked the definition of inflation then
applied it to the inscription at the top of all "dollar bills"
(Federal Reserve Note). By doing so, it will show who is responsible
for the inflation.
Why then isn't this fact brought to light by today's "well educated" economists? They seem to haggle over everything but the true
cause of inflation. Some proof of these bogus theories by economists
can be found in an article written by Julianne Malveaux in the May
24th, 1994 Oregonian:
"While many traditional economists consider the current 6.4
percent unemployment rate 'too low' based on the presumed Phillips
curve trade-off between inflation and unemployment, others say
that the 'natural rate' of unemployment (the rate at which
inflation does not accelerate) is closer to 5.8 percent..."
I say that's a load of bull and here's why:
"...The step-up in monetary growth to 7.3% in 1969-1977 produced a great increase in the inflation rate combined with a
rise in unemployment and a slowdown in the growth of real output. The interest rate on corporate AAA bonds, which had been
virtually constant around 4.5% in 1959-1965, rose to more than
8% in 1970. The period following 1970 was a policy-maker's nightmare, with high rates of interest, INFLATION, and UNEMPLOYMENT
EXISTING SIDE BY SIDE"
Source: Encylopedia of American Economic History.
Charles Scribner's Sons printed 1980.
page 750.
The above section "Central Banking" of this encylopedia used a
table on page 751 very similar to the one I quoted earlier (also
from this encylopedia). The chart clearly indicates the rise in
inflation was accompanied by a rise in unemployment. I will not
reproduce the chart here because this proof is already too long
but any medium to large sized library should have a copy of this
excellent reference work.
Malveaux's article states that inflation and unemployment rates
are inversly proportional to each other. The data for the period
1969-1977 show just the opposite!
Now I ask this question: Which explanation of inflation and its
causes holds water and is completly supported by the facts? Again by
Malveaux:
"I do not think a high unemployment rate has to be the price we
pay for low inflation. Further, the current weak job market...is so
differently configured from the one that generated the Phillips
curve analysis that I would argue that the relationship is much
flatter than it used to be, and that inflation would not 'heat up'
until the unemployment rate under current conditions got as low as
5%."
Although Malveaux doesn't completely agree with her collegues,
she still uses the same flawed theory. And what was this author's
solution? More government control over the labor market! Read it
and see. The next paragraph speaks for itself:
"But as long as there is no labor market czar with as much power
as the chairman of the Federal Reserve Board, the interests of labor will take a back seat to concerns about inflation."
Incredible!
This article was written by Julianne Malveaux, syndicated columnist and an economics professor at the University of
California, Berkley.
Economics professor?
Unless the definition given at the beginning of my article was
wrong, The entire premise of this piece written by Malveaux is a lie.
Maybe I should check another source:
in.fla.tion: 2 An increase of money and credit relative to
available goods resulting in a substantial and
continuing rise in the general price level.
(Websters 3rd International Dictionary unabridged copyright 1961, emphasis added.)
Don't take my word for it, Look it up yourself! Dust off that
wonderful book and put it to some good use. If Webster is correct,
(which he is, I have supplied more than enough evidence to prove
that by now)then what of this character Phillips and his trade-off curve? I suggest that he take all his notes and statistics that
generated the curve and use them for toilet paper!
There are many other misleading theories used by the Fed and
others to cover up the inflation the Fed is actually causing.
However, space will not allow me to cite them all. A list of
articles published in major newspapers will be included at the
end of this commentary to use for your own personal research.
If you've read this far, you'll realize those articles are
nothing but propoganda anyway and I'm providing the list merely
to prove my earlier statements.
Why does it take an average joe like me to point the fallacy
perpetrated by these so called economists? Maybe it's because I was
not fully "indoctrinated" by our wonderful moron producing public
school system. I won't attempt to provide any proof of the "moron
producing" statement other than to say a phone call to any institution of higher learning could provide a record of SAT scores
and their trends during the past few decades.
I feel like the young boy in the story "The Emperor's New
Clothes" All the leading economists are going along with the farce
that inflation is tied to the unemployment rate and economic growth.
Malveaux admitted it. She said "While many traditional economists
consider...others say that..." This would seem to leave very few
left over. Any economists who received their degrees from UC Berkley
and sat through her classes would probably share her views. Also,
since she is an "economics professor", she should know the views of
her colleagues. These economists repeat much of the drivel issued by
the Fed and it's "tailors". I, on the other hand, look in a dictionary and strip away the invisible clothes the Fed claims to be
wearing. Why is this so? Is it because these economists really
believe the Fed isn't responsible? This may be the case with some of
them. But I think most of them do know but like the "Emperor's
subjects" are afraid to say anything out of fear of ridicule.
You know, "go along to get along" and "don't rock the boat". No one
likes to be laughed at and this could be the explanation. The above
has not been stated as fact though. These are the conclusions I've
drawn based on the facts.
I also feel there is something far more sinister afoot.
Again, this is just a gut feeling I get after a careful study of the
facts. Even our Congress (with rare exceptions) doesn't challenge
the Fed on the issue of inflation. Some rare exceptions in the past
have been Congressmen Charles Lindberg Sr., Congressman Louis McFadden, and recently, Congressman Henry B. Gonzalez.
In my opinion, the Fed is nothing more than a licensed counterfeiting organization. The license was granted by congress in the
form of the Glass Owen Act also known as the Federal Reserve Act.
Their actions match the actions of counterfeiters (see below).
What is a counterfeiter guilty of? He is guilty, by the above
definitions, of inflation. A counterfeiter increases the money
supply (provided the funny money is accepted) and the table presented above clearly shows its link to rising prices. counterfeiters
are also guilty of theft because every time they turn on the
printing press, the value of the money in our pocket declines.
This has been proven here. As prices increase, purchasing power
decreases. Where did the purchasing power go? A counterfeiter also
receives something for nothing. They do this when bogus bills are
exchanged for goods and services or "lawful money".
Now, I'm not saying that new currency and credit should never
be added to the system, although an extended period of this might
help restore some of the value of our dollar that has been stolen
from us. The chart seems to indicate this. during the period 1923-
1929, "the roaring 20's" the money supply increased only slightly
faster than the GNP. During this period, prices fell and savings
increased (positive k). From what I've read in the past, most of the
increase in the money supply during this period occurred just before
the stock market crash during 1929. The federal reserve stomped on
the gas and then slammed on the brakes (see explanation of this
below).
What I am saying is the Fed adds far more currency and credit to
the system than is actually needed. They create this money out of
thin air, loan it to us with interest, and in the process are
stealing the wealth of this great Republic right out from under our
noses!
The Feds creation of money was admitted by a governor of the
Fed. The man's name was Marriner S. Eckles. During testimony before
the House Committee on Banking and Currency he was asked where the
money that the Fed introduces into the system comes from. He replied
"We created it." This testimony took place on Sept. 1, 1941 and
can be verified through the Congressional Record for that date.
The way the system is set up, if we were to pay off the loans
from the Federal resereve banking system, we wouldn't have any
currency in circulation! Where would we get the money to pay it
back? We would get it from the money and credit currently in
circulation. Since all of this money was created by the Fed, with
accrued interest added in, the amount owed would be more than what
is available. By paying off all public and private debt we would
leave ourselves with no currency to conduct daily business. Every
dollar in circulation was loaned into existence and is earning
interest for some banker somewhere. Think about it, maybe it'll sink
in. You're probably thinking this simply couldn't be true. Well it
is! The proof of this can be found in a book entitled "100% money"
by Irving Fisher. The forward was written by Robert Haphill who
was a credit manager for the Federal Reserve Bank of Atlanta:
"If all bank loans were paid, no one could have a bank deposit,
and there would not be a dollar of coin or currency in circulation. This is a staggering thought. We are completely dependent
on the commercial banks. Someone has to borrow every dollar we
have in circulation, cash, or credit. If the banks create enough
enough synthetic money we are prosperous; if not, we starve. We
are absolutely without a permanent money system. When one gets a
complete grasp of the picture, the tragic absurdity of our hopeless situation is almost incredible, there it is."
Again this is from the horse's mouth, a credit manager at the
Fed bank of Atlanta and absolutely verifies everything said in
the above section of my original article. He is not being
entirely truthful here though. The board of governors of the Fed
control the reserve requirements that commercial banks must keep
on hand. He seems to blame our dire situation on the "commercial
banks" when the Fed is ultimately in charge. The Fed is also the
lender of last resort to the commercial banks.
We have had the wool pulled over our eyes for far too long.
Since at least Dec. 23, 1913 (date congress passed the federal
reserve act). Note the date here. It appears to have been rammed through Congress at a time when many had possibly returned home for
the holidays. Some Christmas present. Isn't it about time we abolish
the Fed and create our own debt free money? Where would this
Authority come from? From Congress of course!
Article 1 section 8 of
the U.S. Constitution under the section pertaining to the powers of
Congress states:
"To coin money, regulate the value thereof, and of foreign coin,
and fix the standard of weights and measures: To provide for the
punishment of counterfeiting the securities and coin of the United
States:." These are the exact words as they appear in the Constitution and its the solution to our current problem. Congress not
only has the power to coin money,(a power that cannot be delegated
to the Fed or any other entity) it also has the power to punish
counterfeiters.
Should an audit show the Fed has been abusing it's powers, and it
will, they should be tried as counterfeiters. Or, should we ignore
their actions and let them continue to destroy the wealth of the
nation? I say no! Abolish the Fed! Again, by the above definitions
of inflation, the Fed is the sole source of our inflation problems.
Inflation is caused by an increase in the money supply and the Fed
has control over that supply. They are criminals and should be
treated as such.
I would like to use part of a quote here: "Consistency has never
been a mark of stupidity" (James Forrestal). A claim of ignorance
by the the Fed simply won't do. The Fed has continually supplied
more money to the system than is actually needed. This always
works to their advantage because the more money they supply, the
more interest they collect. The continued errors in their favor
indicate a deliberate attemt to corrupt our dollar. There are
some who say that the Fed deliberately expands and contracts the
money supply to cause booms and busts in the economy. This could
be compared to stomping on the gas pedal in your car then suddenly slamming on the brakes over and over again. By knowing when
these were to occur ahead of time, you would be able to make a
killing in the stock and money markets. It's called insider trading and there are people in prison right now for this committing
this crime.
Do we allow a criminal to keep what he has taken from his victim? Certainly not! This is an obvious truth. So neither should we
pay the Fed any debt currently owed. In fact, the assets of the
Federal Reserve banks and it's class A stockholders should be seized
and held as restitution for repayment to the victims (that is us) of
this heinous crime. This occurs all the time in our criminal justice
system. Those assets could also be used to pay off the bonds issued
by the Fed to anyone who has purchased them. This should be done for
any one who bought them without knowing what the Fed was really
up to. The people investing in bonds should not have to suffer for
the crimes of others. The large banks who are members of the federal
reserve system and own most of the stock have been the main beni-
ficiaries of this system and should pay these people their money.
These are just some ideas I have to help dig our way out of this
hole the Fed has dumped us into. They are not presented as fact
(actually the rest of this article indicates my own my personal
feelings and ideas) and require no proof. But I think they are very
reasonable (to everyone but the big banks) and should be given
some consideration.
And what type of system of monetary exchange should be used to
replace that den of theives at the Fed? A question that has been
very difficult to answer over the centuries. If man were perfect,
a paper money system could work. However, man is inherently
greedy and cannot be trusted. He is doomed to repeat the evil
actions that issuers of currency have always adhered to. Until
the evil in man is removed, I see no alternative than to issue
precious metal only. It seems our Founding Fathers felt exactly
the same way. The Constitution says nothing about paper money.
Will it work? Judging from our current system, it couldn't hurt
to try!
Look over the facts that have been presented here and decide for
yourself. See if your opinions match mine. If they do, Let's join together and rid this great Republic of the terrible parasite
called the "Federal Reserve System" once and for all. Lets get
under the hood and FIX IT!
Thanks for your attention,
Paul C. Hanson
The Prosecution rests...
Here is the list of articles I promised:
InfoTrac * National Newspaper Index ¦ 1991 - June 1994
Heading: INFLATION (FINANCE)
-Analysis
1. Inflation: myth and reality. (Column) by Laura
D'Andrea Tyson il 29 col in. v143 The New York Times,
April 15 '94 pA23(N) pA31(L) col 1
HEADINGS
InfoTrac * National Newspaper Index ¦ 1991 - June 1994
Heading: INFLATION (FINANCE)
-Analysis
2. Reading Greenspan's mind. (Federal Reserve Board
Chairman Alan Greenspan) (Column) by Hobart Rowen 20
col in. v117 The Washington Post April 7 '94 pA27 col
1
HEADINGS
InfoTrac * National Newspaper Index ¦ 1991 - June 1994
Heading: INFLATION (FINANCE)
-Analysis
3. Amid shadows, one acquires a feel for substance.
(inflation fears are misplaced, investors should not
be afraid of the stock market) (Column) by James
Flanigan 20 col in. v113 Los Angeles Times March 6 '94
pD1 col 2
HEADINGS
InfoTrac * National Newspaper Index ¦ 1991 - June 1994
Heading: INFLATION (FINANCE)
-Analysis
4. Greenspan uses gold as hedge for future interest
rate hikes. (Federal Reserve Board Chairman Alan
Greenspan) (The Economy: New Fears Over Inflation)
(Column) by James Flanigan 22 col in. v113 Los Angeles
Times March 2 '94 pD1 col 4
HEADINGS
InfoTrac * National Newspaper Index ¦ 1991 - June 1994
Heading: INFLATION (FINANCE)
-Analysis
5. Same forces that pushed securities up now push
them down. (includes related information) (The
Economy: New Fears Over Inflation) (Column) by Tom
Petruno il 22 col in. v113 Los Angeles Times March 2
'94 pD1 col 2
HEADINGS
InfoTrac * National Newspaper Index ¦ 1991 - June 1994
Heading: INFLATION (FINANCE)
-Analysis
6. Yes - inflation is a problem. (Federal Reserve
Board increases interest rates) (Column) by Robert J.
Samuelson 18 col in. v117 The Washington Post March 2
'94 pA17 col 2
HEADINGS
InfoTrac * National Newspaper Index ¦ 1991 - June 1994
Heading: INFLATION (FINANCE)
-Analysis
7. Treasury prices edge up as slight rise in core
inflation is explained away. (Credit Markets) by
Thomas T. Vogel Jr. and Thomas D. Lauricella il 34 col
in. The Wall Street Journal Dec 10 '93 pC14(W) pC15(E)
col 5
HEADINGS
InfoTrac * National Newspaper Index ¦ 1991 - June 1994
Heading: INFLATION (FINANCE)
-Analysis
8. Don't write off deflation quite yet. (eased
inflationary pressures throughout the world) (Column)
by George Melloan 22 col in. The Wall Street Journal
July 19 '93 pA15(W) pA11(E) col 3
HEADINGS
InfoTrac * National Newspaper Index ¦ 1991 - June 1994
Heading: INFLATION (FINANCE)
-Analysis
9. Fed official's inflation view. (governor of
Federal Reserve Board, Susan Phillips) 4 col in. v142
The New York Times July 7 '93 pC17(N) pD17(L) col 5
HEADINGS
InfoTrac * National Newspaper Index ¦ 1991 - June 1994
Heading: INFLATION (FINANCE)
-Analysis
10. Concrete reason for higher prices. (response to
May 18 article on Lafarge Corp. prices and inflation)
(Letter to the Editor) by Edward B. Pile 5 col in.
v116 The Washington Post June 2 '93 pA18 col 5
HEADINGS
InfoTrac * National Newspaper Index ¦ 1991 - June 1994
Heading: INFLATION (FINANCE)
-Analysis
11. Is Amax deal a warning of inflation? (analysis of
of inflation, commodity prices, and Amax Inc.'s
decision to sell out to Cyprus Minerals) by Floyd
Norris il 11 col in. v142 The New York Times May 30
'93 sec 3 pF1(N) pF1(L) col 1
HEADINGS
InfoTrac * National Newspaper Index ¦ 1991 - June 1994
Heading: INFLATION (FINANCE)
-Analysis
12. Inflation fears: a concrete example. (cement
makers' price increase could be sign of bad economic
trend) by Steven Mufson 26 col in. v116 The Washington
Post May 18 '93 pD1 col 1
HEADINGS
InfoTrac * National Newspaper Index ¦ 1991 - June 1994
Heading: INFLATION (FINANCE)
-Analysis
13. Surprise rise: inflation is picking up despite an
economy that continues slow; steel and auto prices
climb on foreign rivals' woes; even funerals cost
more; but no one predicts a surge. (analysis of slight
rise in inflation figures) by David Wessell and
Douglas Lavin il 45 col in. The Wall Street Journal
May 17 '93 pA1(W) pA1(E) col 6
HEADINGS
InfoTrac * National Newspaper Index ¦ 1991 - June 1994
Heading: INFLATION (FINANCE)
-Analysis
14. Rise in prices stirs more inflation fears. (Labor
and Commerce Department reports) by Jube Shiver Jr.
18 col in. v112 Los Angeles Times May 14 '93 pA1 col 6
HEADINGS
InfoTrac * National Newspaper Index ¦ 1991 - June 1994
Heading: INFLATION (FINANCE)
-Analysis
15. Prices at wholesale surge 0.6%, fanning worry
about inflation; bad weather is cited for some of the
April rise. (analysis of Labor Department statistics)
by Sylvia Nasar il 27 col in. v142 The New York Times
May 13 '93 pA1(N) pA1(L) col 1
HEADINGS
InfoTrac * National Newspaper Index ¦ 1991 - June 1994
Heading: INFLATION (FINANCE)
-Analysis
16. Inflation: sometimes you don't know what you've
got until it's gone. (analysis of benefits created by
economic inflation) by Irwin L. Kellner 23 col in.
v111 Los Angeles Times Sept 6 '92 pD2 col 1
HEADINGS
InfoTrac * National Newspaper Index ¦ 1991 - June 1994
Heading: INFLATION (FINANCE)
-Analysis
17. Inflation fears seen as threat to economy; Fed
chairman says belief is mistaken and is keeping interest rates too high. (Federal Reserve Board
Chairman Alan Greenspan) by Kenneth H. Bacon 11 col
in. The Wall Street Journal June 4 '92 pA2(W) pA2(E)
col 2
HEADINGS
InfoTrac * National Newspaper Index ¦ 1991 - June 1994
Heading: INFLATION (FINANCE)
-Analysis
18. Stock prices as measured by inflation. (1960 into
early '90's) (Column) by Floyd Norris il 16 col in.
v141 The New York Times Jan 29 '92 pC8(N) pD8(L) col 3
HEADINGS
InfoTrac * National Newspaper Index ¦ 1991 - June 1994
Heading: INFLATION (FINANCE)
-Analysis
19. Industry output increases 0.5%, inventories fall;
statistics indicate rebound in economy as inflation
appears under control. by Paul Duke Jr. il 15 col in.
The Wall Street Journal June 17 '91 pA2(W) pA2(E) col
1
HEADINGS
InfoTrac * National Newspaper Index ¦ 1991 - June 1994
Heading: INFLATION (FINANCE)
-Analysis
20. Are you beating inflation? (column) by Jane Bryant
Quinn 16 col in. v114 The Washington Post April 21 '91
pH3 col 4
HEADINGS
