"Give me control of a nation's currency and I care not who makes the laws "
- Baron Rothschild 
     On the night of December 23, 1913, Congress passed the Federal Reserve Act.  The Result?  The greatest theft in the history of the world, the loss of America's gold and silver reserves, and a federal debt of over five trillion dollars!
     Although Article 1, Section 8, of the Constitution, makes Congress responsible for coining money, it is the Fed that has total monetary control.  However, the Fed is not a Federal agency and has no reserves, it is a privately-owned banking system, as proven in court:
     A Mr. Lewis was injured by a Federal Reserve vehicle and sued the U.S. government for damages. The court ruled,  "...that since the Federal Reserve System and its twelve branch banks are private corporations, the federal government could not be held responsible."- Lewis v. U.S.,  608F 2d 1239 (1982).
     U.S. paper currency reads: Federal Reserve Note." But, "Money in usual and ordinary acceptation... does not embrace notes." - Black's Law Dictionary, 6th Ed.
    All money in circulation is borrowed; every dollar in your possession is a debt to the Fed.  If all debts were repaid, there would be no money in circulation!
     When Congress needs money, the Fed sells Treasury Bonds (pieces of paper) for the amount required at an interest rate set by the Fed.  Treasury then sends the printed currency to the Fed which pays a few pennies (about four cents) for each printed bill.  This money is then loaned back to us through the banks which loan it as debt money.  All money is borrowed, but only principal can be borrowed, the interest cannot be borrowed.  Thus, a problem occurs when, for example, the Fed loans $100 million to a bank at 10%.  The bank must repay $110 million; but since only $100 million was issued, the unissued $10 million must become debt.  The Fed can never be repaid!
     Furthermore, if a business borrows $500,000 at 10%, the money is spent into circulation, and the economy improves.  But when the debt plus interest ($550,000), is repaid, more money is removed from circulation than was put in, and the economy suffers.
     Just as destructive is Fractional Reserve Banking. In the pamphlet I Bet You Thought by the Federal Reserve Bank of Boston, it states, "Banks create money by monetizing debt."  For example, if the Fractional Reserve  is  10%,  a bank  that  has  on deposit $1 million  (10% of $10 million) can  loan  an additional $9 million, money the banks don't actually have- they've created money!
       To protect depositors, banks are insured for $100,000 per account by the FDIC, a government agency, funded by taxpayers.  When there are major failures, such as the Savings and Loan debacle or foreign loan repayment defaults, Congress uses taxpayer money to bail out the banks.   The banking interests never lose!
       The Fed controls the economy with interest rates.  Rates go up, less borrowing, less money in circulation, the economy slows.  Rates go down, more borrowing, more money in circulation, and the economy heats up.  But if  U.S. or foreign investors lose faith in the economy the Fed will be unable to exert control.
       The Fed collects interest, in gold, on every dollar issued.  (They do not accept Federal Reserve Notes). And, by law, they pay no federal taxes.  In 1992 each stockholder received dividends of $15.5 billion.  Who are the stockholders?  Not the American public!  In Secrets of the Federal Reserve, author Eustace Mullins writes they are:  the Rothschilds (London & Berlin), Lazard Bros. (Paris), Israel Seiff (Italy), Kuhn-Loeb Co.(Germany), Warburg Co. (Hamburg & Amsterdam), Lehman Bros. (NY), Goldman Sachs (NY), Rockefeller family (NY), and the J.P. Morgan interests (NY). Although the Fed Chairman is required to report to Congress, he is not directed by it.

      Until 1913, tariffs on trade furnished most of the money needed to fund the federal government.  Then Congress passed the Underwood trade bill, which canceled most tariffs. Suddenly, Congress claimed it had to find another tax source. Senator Aldrich co-sponsored the 16th Amendment creating the Income Tax.  Soon after passage by Congress in 1913, Philander Knox issued the odd announcement that, "The 16th Amendment seems to have been ratified."
      Doubting ratification of the 16th Amendment by three-fourths of the states, Bill Benson and M. J. "Red" Beckman traveled to 48 states (Alaska and Hawaii were not states in 1913). They got certified copies of all ratification documents from each of the legislatures, (17,000 documents) and, in a two-volume work, proved that not one state had legally ratified the 16th Amendment as written. See:
        That isn't all. "The Internal Revenue Service was never authorized by Congress." - Public Notice - Media Bypass, March, 1997 - An unconstitutional act is enforced by an unauthorized agency.
        Withholding taxes, an emergency measure initiated only for World War II, are still collected.
        Income taxes pay only Federal Reserve debt and IRS expenses.  "Income taxes do not fund any government function." - Page 12, President's Private Sector Survey on Cost Control, January 15, 1984 - Library of Congress.

     Alexander Hamilton lobbied for the first privately-owned federal bank.  However, Thomas Jefferson opposed it writing, "If the American people ever allow the 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 property, until their children will wake up homeless on the continent their fathers occupied."  In 1789, ignoring Jefferson's warning, Congress chartered the bank for 20 years.
      In 1792, Congress specified that only gold and silver were lawful money.  Owners sent these precious metals to the U.S. Mint to be made into coins.  This money was spent into the economy and remained in circulation.  Every dollar improved the economy, and, in an exchange of goods for money, the seller received gold or silver coins.  The U.S. had a privately-owned national bank and lawful money at the same time.
       In 1811, Thomas Jefferson, then president, refused to renew the bank's charter.  In a letter to James Madison he had written, "I believe that banking institutions are more dangerous to our liberties than standing armies."

       In 1816 Congress chartered a second federal bank for 20 years.  When the charter was nearing renewal in 1836, National Bank President Biddle, threatened President Jackson, that if the charter was not renewed he would destroy the U.S. economy.  But Jackson was not one to be intimidated., he overrode Congress, and closed the bank commenting, "The bold effort the present bank had made to control the government... are but premonitions of the fate that awaits the American people should they be deluded into a perpetuation of this institution or the establishment of another like it."
       So, for 76 years there was no federal bank, gold was $20 an ounce, and Congress adhered to Article 1, Section 8, of the Constitution; it regulated  money.

        In "From Farm Boy to Financier," Frank Vanderlip wrote, "Since it would be fatal to Senator Aldrich's plan to have it known that he was calling on anybody from Wall Street to help him in preparing his report and bill, precautions were taken... Asked to go were Henry Davison, Paul Warburg, Ben Strong and myself.  From Washington came A. Piatt Andrew Jr.... We were told to leave our names behind us... We were instructed to come one at a time and as unobtrusively as possible to the railroad terminal... where Senator Aldrich's private car would be in readiness... Discovery, we knew, simply must not happen... If it were to be exposed publicly that our particular group had written a banking bill, that bill would have no chance whatever of passage by Congress... although the Aldrich Federal Reserve plan was defeated its essential points were contained in the plan that was finally adopted..."
        The Fed was chartered to end economic fluctuations.  However, Congressman Lindbergh, the aviator's father, disagreed stating,  "The new (Federal Reserve) bill will create inflation whenever the trusts want a period of inflation... they figure they can unload the stocks on the people at high prices during the excitement and then bring on a panic and buy them back at low prices... The people may not know it immediately, but the day of reckoning is only a few years removed..." - Congressional Record, Dec. 22, 1913

1929 - THE CRASH
      Lindbergh had been right, only 16 years passed before the U.S. entered the worst financial recession in its history, the Great Depression.
      Even though many economists state the depression was caused by the Smoot-Hawley Tariff Act, which increased duties on imports, the Smoot-Hawley bill was not signed into law until April of 1930, eight months after the crash.
     But not all believed tariffs were at fault. "When business in the United States underwent a mild  contraction in 1927, the Federal Reserve created more paper currency in the hope of forestalling any possible bank reserve shortage... More disastrous, however, was the Federal Reserve's attempt to assist Great Britain... The excess credit spilled over into the stock market- triggering a fantastic speculative boom... As a result the American economy collapsed." - Gold and Economic Freedom by Alan Greenspan, Chairman, Federal Reserve.
     Still others believed that the crash was planned.  "It was not an accident, it was a carefully contrived occurrence.  The international bankers sought to bring about a condition of despair here so they might emerge as rulers of us all." - Louis B. McFadden, Chairman,  House Banking Committee, 75th Congress. (Prior to investigating the Fed, McFadden died of a suspicious "heart failure" after food poisoning). The Fed has never been audited, or  investigated!
       Concerned about the 1987 stock market plunge, the Fed now has an illegal  "Plunge Protection Team" - (AP 10/17/97) to buy stocks if a massive sell-off threatens the stock market.

      America had suffered panics and recessions before but had always quickly recovered.  Now there was no sign of recovery.  Few Americans realized that the Fed's debt money was destroying the economy.  Except for gold and silver coins, all of the money in circulation was borrowed.  Consequently, when companies and brokerage houses went bankrupt, banks, dependent on repayment of the loans, began to fail.  Depositors withdrew their savings, banks recalled loans, no one was borrowing, and paper currency began to disappear.
     Then, in 1933 President Roosevelt confiscated gold coins.  The government bought the coins at $20 an ounce, and then, just six months later, revalued gold to $32 an ounce.  The government had just conned its own citizens during those desperate times.
     Except for silver coins, this left only paper currency in circulation, trapping the economy in a vicious circle.  Worried, people bought only necessities, causing companies to lay off more workers and cut borrowing.  This reduced the amount of currency in circulation, creating more thrift.  In 1927 the M1 money supply (currency plus demand deposits) had been $26.10 billion, but by 1933, instead of increasing, it had decreased by almost 25% to $19.91 billion. (Historical Statistics of U.S. Colonial Times to 1970 - U.S. Dept. of Commerce) - Debt money had come home to roost!
     The government started programs to pump money into the economy, building dams, roads, parks, etc.  But this didn't compare to the money generated by a flourishing industrial nation It was only the massive spending of the Second World War that ended the Great Depression.

      Since then, our currency has steadily deteriorated.  In 1965, President Johnson removed silver from coins.  And, in 1978, Congress took us off the gold standard, but the definition of lawful money has not changed: "Lawful Money... to mean gold and silver coin of the United States." - U.S. Code, Title 12, Section 152..


      We now have fiat money (currency not backed by anything of true value), which can be devalued at any time.  Gold, $20 an ounce in 1933, is now several hundred dollars an ounce. It has been the devaluation of the dollar, not inflation, which has reduced its buying power.  But Congressmen are content, knowing that with fiat money they don't have to raise taxes, the Fed will provide the money and just put us deeper in debt.

"When a well-packaged web of lies has been sold gradually to the masses over generations, the truth will seem utterly preposterous and its speaker a raving lunatic." 
-  anonymous 
Ref: (Wallace Institute), and: The Creature from Jekyll Island by G. Edward Griffin 
Hypertexted from the Original Publication by:
Citizens for Better Government, Gainesville, Fla.
Last Modified: August 8, 2002
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