Tuesday, August 25, 2009
“Paper money eventually returns to its intrinsic value – zero.” ~ Voltaire
“The Federal Reserve in collaboration with the giant banks has created the greatest financial crisis the world has ever seen. The foolish notion that unlimited amounts of money and credit created out of thin air can provide sustainable economic growth has delivered this crisis to us. Instead of economic growth and stable prices, (The Fed) has given us a system of government and finance that now threatens the world financial and political institutions. Pursuing the same policy of excessive spending, debt expansion and monetary inflation can only compound the problems that prevent the required corrections. Doubling the money supply didn’t work, quadrupling it won’t work either. Buying up the bad debt of privileged institutions and dumping worthless assets on the American people is morally wrong and economically futile.” ~ Representative from Texas Ron Paul questioning Federal Reserve Chairman Ben Bernanke
I’ve read and witnessed various pundits during the Presidential campaign describe Ron Paul as crazy. The corrupt tax and spenders in Congress know their days would be numbered if they followed his vision of government. After reading his tremendously sane rebuke of Ben Bernanke and the policies of his Federal Reserve, I’m reminded of a classic scene from Seinfeld.
Jerry: “Ah, you’re crazy.”
Kramer: “Am I? Or am I so sane that you just blew your mind?!”
Jerry: “It’s impossible!”
Kramer: “Is it? Or is it so possible that your head is spinning like a top?!”
Jerry: “It can’t be.”
Kramer: “Can it? Or is your entire world just crashing down all around you?”
Jerry: “Alright, that’s enough.”
Ron Paul’s scathing assessment of the Federal Reserve’s primary role in creating the financial crisis and his raking of Chairman Bernanke over the coals is so accurate, truthful and sane that it should blow your mind. Mr. Bernanke must have felt like his head was spinning like a top while Ron Paul gave him a tutorial in basic economics. Mr. Paul’s noble efforts to Audit the Fed (HR 1207) and eventually to rid the country of its insidious control over our lives will bring the pillars of the Federal Reserve building crashing down upon Mr. Bernanke in his mahogany paneled, gold plated boardroom with ornate chandeliers.
The worldwide financial system experienced a 6.8 magnitude earthquake in September 2008. The very foundations of our economy were shaken to their core. The fear exhibited by government officials, politicians, and the public was palpable and real. For a few weeks there was the distinct possibility that the system would come crashing down. A massive printing of dollars by the Federal Reserve, the clandestine buying up of toxic assets by the Federal Reserve, behind the scenes deals with the biggest banks, covert currency swap deals with foreign Central Banks, and forcing the FASB to change accounting rules to allow banks to fraudulently value bad loans, temporarily staved off the final chapter in the 96 year old diabolical experiment in currency manipulation.
The moment when the system stopped functioning was our “Minsky Moment”. Hyman Minsky was an American economist and professor of economics at Washington University. Dr. Minsky put forward theories linking financial market vulnerability, in the normal life cycle of an economy, with speculative investment bubbles produced by financial markets. Minsky declared that in good times, when corporate cash flow rises beyond what is needed to pay off debt, a speculative bubble develops, and soon thereafter debts exceed what borrowers can pay off from their incoming revenues, which in turn produces a financial emergency. As a result of such dangerous debt bubbles, banks tighten credit availability, even to companies with good credit, and the economy enters recession.
This movement of the financial system from stability to crisis is the “Minsky Moment”. At this point, a major selloff begins due to the fact that no counterparty can be found to bid at the asking prices previously quoted, leading to a swift and steep collapse in markets and a dramatic drop in market liquidity. What Dr. Minsky failed to address was that the Federal Reserve has been responsible for every financial crisis in the United States since 1913.
A History of Crisis & Political Influence
The history of the Federal Reserve is shrouded in mystery, with bankers and corrupt politicians calling the shots from the very outset. On the evening of November 22, 1910 , Senator Aldrich and A.P. Andrews (Assistant Secretary of the Treasury Department), Paul Warburg (a naturalized German representing Baron Alfred Rothschild’s Kuhn, Loeb & Co.), Frank Vanderlip (president of the National City Bank of New York), Henry P. Davison (senior partner of J.P. Morgan Company), Charles D. Norton (president of the Morgan-dominated First National Bank of New York), and Benjamin Strong (representing J. P. Morgan), left Hoboken, New Jersey on a train with a mission to gain complete control over the currency of the United States.
Forbes magazine founder Bertie Charles Forbes described the meeting on Jekyll Island, South Carolina that brought about the Federal Reserve:
“Picture a party of the nation’s greatest bankers stealing out of New York on a private railroad car under cover of darkness, stealthily riding a hundred of miles South, embarking on a mysterious launch, sneaking onto an island deserted by all but a few servants, living there a full week under such rigid secrecy that the names of not one of them was once mentioned, lest the servants learn the identity and disclose to the world this strangest, most secret expedition in the history of American finance. I am not romancing; I am giving to the world, for the first time, the real story of how the famous Aldrich currency report, the foundation of our new currency system, was written… The utmost secrecy was enjoined upon all. The public must not glean a hint of what was to be done. Senator Aldrich notified each one to go quietly into a private car of which the railroad had received orders to draw up on an unfrequented platform. Off the party set. New York’s ubiquitous reporters had been foiled… Nelson (Aldrich) had confided to Henry, Frank, Paul and Piatt that he was to keep them locked up at Jekyll Island, out of the rest of the world, until they had evolved and compiled a scientific currency system for the United States, the real birth of the present Federal Reserve System, the plan done on Jekyll Island in the conference with Paul, Frank and Henry… Warburg is the link that binds the Aldrich system and the present system together. He, more than any one man, has made the system possible as a working reality.”
On December 19, 1913 Congress had two versions of a Federal Reserve bill with forty major differences. Many Senators left town for the Christmas break and President Wilson didn’t anticipate a final bill until January. In a matter of hours, the forty differences were reconciled and the bill was voted on with 22 of the 88 Senators not in town. It passed and was on Wilson’s desk for signature by December 22. He refused to sign it, until convinced by Bernard Baruch, a major contributor to his campaign and Wall Street millionaire. The passage of the Federal Reserve Act became known as “the Christmas massacre”
During the legislative process Senator Henry Cabot Lodge Sr. wisely pointed out the bleak future we would endure by giving bankers control over our destiny.
“The powers vested in the Federal Reserve Board seem to me highly dangerous especially when there is political control of the Board. I should be sorry to hold stock in a bank subject to such dominations. The [Federal Reserve] bill as it stands seems to me to open the way to a vast inflation of the currency.… I do not like to think that any law can be passed that will make it possible to submerge the gold standard in a flood of irredeemable paper currency.”
“This [Federal Reserve Act] establishes the most gigantic trust on earth. When the President signs this bill, the invisible government of the monetary power will be legalized….the worst legislative crime of the ages is perpetrated by this banking and currency bill. The financial system has been turned over to the Federal Reserve Board. That Board administers the finance system by authority of a purely profiteering group. The system is Private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people’s money. From now on, depressions will be scientifically created.”
The Federal Reserve Act of 1913 created the Federal Reserve Bank with the following mandate:
An Act To provide for the establishment of Federal reserve banks, to furnish an elastic currency, to afford means of rediscounting commercial paper, to establish a more effective supervision of banking in the United States, and for other purposes.
The original mandate was clearly limited. The idea was that a Central Bank would be able to keep the periodic panics like the Panic of 1907 from ever happening again. It appears that four innocuous words opened up Pandora’s Box and unleashed evils upon all mankind – “and for other purposes”. The bankers who control the Federal Reserve along with their politician protectors have dramatically expanded the scope, authority and influence of the Federal Reserve with each scientifically created crisis that has occurred in the last 96 years. They are attempting to grab more power as we speak.
This article was posted: Tuesday, August 25, 2009 at 9:58 am