I would gladly pay you Tuesday…
Saturday, August 21st, 2010
I asked many of my co-workers and friends what they know about the Federal Reserve. Some never heard of it and others just “stay out of politics”. Congress either understands the Federal Reserve about as well as me and the people I work with or they understand it very well and use it for their own purposes. My guess is there is a little of both.
Woodrow Wilson signed the Federal Reserve Act into law in 1913 with hopes of keeping the American economy stable. The great depression happened after the stock market crashed in 1929 so apparently it didn’t work. Conspiracy theories portray that It worked out nicely for the guys funding the Federal Reserve.
By the way did you know Woodrow Wilson’s second wife Edith was a descendant of Pocahontas and he was instrumental in women gaining the right to vote as well as creating the IRS and involving us in WWI.
It seems that Wilson’s purpose, which was passed by congress, was to establish a system of banking that would remain independent but overseen by congress to protect the American economy. My smart friend Fred says… ‘ There is evidence that no one in government or banking has been properly taught recently. At least they don’t seem to be interested in financial stability as much as in how to flip securities and create new “products” to flim-flam investors, other banks and foreign governments. ”
Oversight of the Federal Reserve is quite obviously an important issue that we need to understand and pay attention to. As Fred stated “Money is a debt of the government with no interest rate. When you have a hundred dollar bill it means the government owes you a hundred dollars. You can take it to any bank and exchange it for another or a combination of smaller currency or coin equal to $100. You used to be able to get gold or silver but that was eliminated in 1933. Can you imagine trying to keep track of a $5 gold fleck?”
So, we can’t run around with little gold flecks in our pockets or chickens or buckets of oil or items of value so money is printed. A loan from the government covered by the value of the US treasury which is manipulated by the individuals at the Federal Reserve. We vote for congressmen to keep an eye on the Fed, AKA oversight.
In 1895, the Federal Treasury was nearly out of gold. President Grover Cleveland arranged for J.P. Morgan to create a private syndicate on Wall Street to supply the U.S. Treasury with $65 million in gold. JP Morgan pretty much owned the US treasury, as a consequence Cleveland, a democrat, angered his democratic constituents, and lost the presidency to Republican William McKinley. Mckinley established gold as the only standard for redeeming paper money with the Gold Standard Act in 1900. He was assassinated in 1901.
Another panic in 1907 was a financial crisis that almost crippled the American economy, yet again. Major New York banks were on the verge of bankruptcy and there was no mechanism to rescue them until Morgan stepped in, yet again and personally took charge, resolving the crisis.
Morgan organized a team of bank and trust executives which redirected money between banks. A delicate political issue arose regarding the brokerage firm of Moore and Schley, which was deeply involved in a speculative pool in the stock of the Tennessee Coal, Iron and Railroad Company. Moore and Schley had pledged over six million of the Tennessee Coal and Iron (TCI) stock for loans among the Wall Street banks. The banks had called the loans, and the firm could not pay. If Moore and Schley should fail, a hundred more failures would follow and then all Wall Street might go to pieces. Too big to fail was going on back in 1907. Morgan decided they had to save Moore and Schley.
Vowing to never let it happen again, and realizing that in a future crisis there was not likely to be another Morgan, banking and political leaders, led by Senator Nelson Aldrich devised a plan that became the Federal Reserve System in 1913. The crisis underscored the need for a powerful mechanism, and Morgan supported the move to create the Federal Reserve System. Yay!! it’ll never happen again and we don’t have to pay attention. Then you may ask “Why did the great depression happen if the Federal Reserve System was established to protect the American economy”? Well, either something evil was going on or just plain stupidity (on our part) and greed.
President Lincoln didn’t like the idea of a Central Bank and stated…
“The money powers prey upon the nation in times of peace and conspire against it in times of adversity. The banking powers are more despotic than a monarchy, more insolent than autocracy, more selfish than bureaucracy. They denounce as public enemies all who question their methods or throw light upon their crimes. I have two great enemies, the Southern Army in front of me and the bankers in the rear. Of the two, the one at my rear is my greatest foe. Corporations have been enthroned, and an era of corruption in high places will follow. The money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until the wealth is aggregated in the hands of a few, and the Republic is destroyed.”
Shortly after he said this, he was assassinated.
Banks store our money for us so we don’t have to walk around with our wad in our boots. It isn’t sitting in a vault waiting for us to come and get it. The bank has devised ways to turn our little wad into a bigger wad for themselves through speculation and manipulation of fractional reserves (watch the video at http://www.youtube.com/watch?v=iYZM58dulPE to understand it better). They also extend credit to us based on our wad and make money off the interest.
We all need to treat our credit cards like a 30 day note, you borrow to get things you want in the immediate sense rather than having to wait for your next paycheck. If you pay it back before the 30 days is up, you don’t have to pay interest, you just pay back what you borrowed. So we can live happily ever after surrounded by the ones we love. Isn’t that the ultimate goal? for our money to buy our happiness? Like a patient said to me once “you never see a hearse pulling a U-haul”.
