The Federal Reserve Plunders America

Posted on Posted in Economy, Regulation

Few things make me angrier than being cheated or deceived.  And, I believe we are being deceived by our government and cheated by the special interests that corrupt our officials.  Normally, I avoid political posts, but the bankers and other special interests are looting our treasury and this is beginning to cripple the finances of our nation.  We are losing credibility in the international community and shifting a massive burden of debt onto our citizens.

The Fed is a Joke, Literally

Whether or not you are interested in politics, economics or the future of our nation, you owe it to yourself to watch this video.  It explains exactly how the Fed is undermining America and why we need to stop them.

What is the Federal Reserve?

Most people think the Federal Reserve is a government agency that answers to our elected officials and ultimately voters.  But, nothing could be further from the truth.  The Fed is actually a central bank, that is primarily a private entity and much of its input comes from member banks.  Although the Chairman testifies in front of Congress and the Board of Governors is appointed by the President, the Fed is virtually unaccountable to the public.

As the nation’s central bank, the Federal Reserve derives its authority from the U.S. Congress. It is considered an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government, it does not receive funding appropriated by Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms.

Source: FederalReserve.gov

Why the Fed is Being Criticized

The Fed has gotten touchy lately as the criticism mounts and they have become more vocal in defending their actions.  Bernanke’s speech in Germany is a prime example of the Fed’s attempt to stem the criticism and sell QE2 as necessary for America.  But, it’s increasingly obvious the Fed is working for the benefit of bankers and not for the benefit of Americans.  There are valid reasons for criticism of the Fed and these problems need to be addressed.

  • Economic manipulation, causing boom and bust cycles
  • Ineffective oversight as a regulator of member banks
  • A culture of secrecy and refusal to allow public audits
  • Suspicious favoritism in deals with investment banks 
  • Questionable economic data compiled and published

Fixing the Problems

Stopping Quantitative Easing – The proposed QE2 program, which benefits investment banks at our expense, needs to be stopped immediately.  America cannot tolerate another $600 Billion in debt, a weaker dollar and dangerous stimulus for inflation.  International economists are universally critical of QE2, because it’s a potential disaster for the global economy.

Federal Reserve Transparency Act – The Federal Reserve should be audited by an independent source and the results of this audit should be made available to the public.  According to the proponents of H.R. 1207, the Federal Reserve hasn’t been audited by Congress since their creation in 1913.  This law would reform the way the Fed is audited and set a deadline for an audit.

Limiting the Fed’s Mandate – I watched Senator Bob Corker (R-TN) on CNBC Wednesday and he proposed limiting the Fed’s mandate to controlling inflation.  A growing number of Republicans want to eliminate the Fed’s mandate for full employment, because it may conflict with the stability mandate.  The Fed’s original stimulus seems to have been ineffective in reducing unemployment, but it provided a huge windfall for banks and businesses.

The Bottom Line

The bottom line is that a growing number of critics are starting to question the motives and allegiance of the Federal Reserve.  And, this is a very good thing for America.  The sooner the Fed’s books are made public, the sooner we can defend our treasury from opportunistic special interests.

“Most Americans have no real understanding of the operation of the international money lenders. The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and manipulates the credit of the United States.”

Barry Goldwater – Former U.S. Senator (R-AZ)

Recommended Reading

Balance Junkie – QE Collateral Damage
LOL Fed – When you Mock Ben the Terrorists Win
Online Investing AI – Can the Government Control the Business Cycle?

This post was featured on the Carnival of Personal Finance over at Sweating the Big Stuff.  If you aren’t familiar with the Carnival of Personal Finance, you need to check it out. It’s the greatest carnival on the net.

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21 thoughts on “The Federal Reserve Plunders America

  1. Thanks for sharing the video.

    The “Federal Reserve Bank” is actually nothing of the sort. It’s not federal, in that the officers are not elected. It’s not a reserve, because they don’t own anything. And, it is not a bank.

    Hopefully the internet will make more people aware of what is happening to our country.
    George recently posted..The Secret to a Successful BlogMy Profile

    1. George,

      Before I took Economics in college, I was fooled by the way they called themselves “The Fed” and I’m certain that was the purpose.

      I am glad to see the criticism rising and I hope this brings about changes in the way our monetary policy is set. There is no questions that QE2 may be the straw that broke the camel’s back. Even those who aren’t knowledgable about Economics are still very angry about the bank bailouts, because they know we got scammed.

  2. Unfortunately, I think the misconception is intentional. The name Federal Reserve conveys a suggestion of legitimacy, much like a private organization calling itself The Whatever Mint allows it to sound like a government agency striking legal tender.

    I like the idea of auditing the Fed. My only concern (admittedly, I only briefly read the bill you mention) is that it has no teeth. So what if we audit? Did I miss a crucial point?
    Cognoramus recently posted..Financing Rip-offs- A Military “Discount”My Profile

    1. Cognoramus,

      From everything I have read, if the results of an audit of the Fed were made public, people would immediately demand they were shut down. Supposedly, there is a ton of money flowing to investment banks from the Treasury, that would be considered imprudent, if not illegal.

      My opinion is there should be no secrects. If the Fed is operating in the best interests of citizens, they should have no problem opening up their books. The fact they refuse to submit to an audit makes it obvious they are operating purely for the benefit of banks.

  3. Thanks for sharing this. I watched the video and laughed pretty hard at some parts. But the truth is that this situation isn’t all that funny. It really does make me ask myself everyday if I have somehow landed in the Twilight Zone as I listen to and read others cheer the market higher, even if its success is built on quicksand.

    Unfortunately, I think the average person is too busy trying to make ends meet to try to understand all of this rather complicated monetary stuff. I think that’s how they get away with it. As long as they can manipulate the stock market higher people are less likely to question their methods.
    Balance Junkie recently posted..Book Review- The Fearful Rise of MarketsMy Profile

    1. The video is great because anyone can understand it. And, it’s indefensible by the Fed, because it’s honest and accurate. There is no confusing double-talk to hide behind.

      I am hopeful the rising level of criticism of the Fed, combined with the new tea Party politicians and agner from the public can turn the tide against this type of theft from the Treasury.

  4. I thought the video was a stich. And I certainly am no fan of the Federal Reserve.

    In fairness, though, I think it needs to be said that deflation would cause millions of people intense financial pain. If we have deflation, the size of any debt grows dramatically in real terms. If you have an outstanding college loan, or a mortgage, or credit card debt, you are going to be hurt by deflation. We experienced high deflation in the early years of The Great Depression. It wasn’t fun.

    My view is that we should all favor economic STABILITY. It is in an environment of economic stability that the average middle-class person stands the greatest chance of getting ahead gradually over time. That means no more bull markets.

    The bottom line on all this is that, once we permit a bull market of the size we experienced in the late 1990s, it takes decades of financial pain to set things straight again. The Fed is a political institution. It engages in all sorts of funny business for the same reasons politicians do — it doesn’t respect the people enough to talk straight with them.

    Have we earned the right to be spoken to as grown-ups? My take is that we are getting there but that we are not there yet. The big day comes when we can all speak plainly and clearly and frankly and honestly about the huge financial pain we caused ourselves and all our friends, neighbors and co-workers with our irresponsible behavior of the late 1990s.

    The Fed certainly didn’t help. But the Fed didn’t do this on its own. Anyone who purchased stock at the prices that applied from 1996 through 2008 contributed in a big way to the problem. The saying that applies is — You can’t con an honest man. When we start being honest with ourselves about how stock investing works, the Fed loses its ability to get away with playing these kinds of games with our money.

    Rob
    Rob Bennett recently posted..“Take a Bow- Bill Bengen! Take a Bow- Trinity Authors! Take a Bow- John Greaney! Take a Bow- Bill Sholar!”My Profile

    1. Rob,

      I’m calling B.S. on the whole deflation boogeyman. As stated correctly in the video, inflation already exists and real costs are going up for real Americans.

      Just because the government uses a rigged CPI, doesn’t mean there isn’t inlfation. ShadowStats.com pegs inflation above 4%, using the pre 1990 CPI. I think this is much more accurate than the 1% of the new CPI.

      As for the prospects for deflation, we only need to look at Japan for an example. Two things are painfully obvious from their problems:

      1) Insanely overvauled real estate must be allowed to come back down to reality.

      2) Monetary intervention didn’t help their economy.

      Unless we want to end up like Japan, we need to learn these lessons from their misfortune.

  5. Hi Bret, I was made aware of this video on Twitter, and I have watched it a couple of times. It is funny because it says things in plain language, as opposed to government officials and economists.

    I recommend anyone who wants to know how the Federal Reserve really works to read “The Creature from Jekyll Island.” It was an eye opener. The Fed is run by the bankers for the bankers, and as the video mentions, Government – er – Goldman Sachs directly benefits from government policies to the detriment of the American people. The Fed needs to be abolished, but an audit is a step in the right direction.
    Jennifer Barry recently posted..5 Surprising Benefits of Learning SpanishMy Profile

    1. Jennifer,

      I will definitely have to read this book. I also think the Fed needs to be abolished, unless they are properly regulated and audited.

      In one of my previous posts, I mentioned that Andrew Jackson got rid of the central bank and that was the last time this country operated without a deficit. We were completely solvent.

  6. The only reason we would have significant deflation is because we had a significant credit rampup in the first place. No credit inflation = no deflation. Over time this deflation must happen one way or the other if the malinvestments are to be purged and if growth is to resume.

    My personal view is that we simply need to extend the same benefits that central bankers currently enjoy to the people: Allow the people to transact and contract in any currency they prefer, and strike off any laws that require payment in federal reserve notes or anything similar to that, perhaps public debts such as taxes can remain an exception. All private transactions should be completely unencumbered by such laws which artificially support the federal reserve.
    Invest It Wisely recently posted..How Mozrank is Filling in the Gaping Hole Left by the Departure of PagerankMy Profile

    1. “Over time this deflation must happen one way or the other if the malinvestments are to be purged and if growth is to resume.”

      Kevin,

      I agree with this statement 100%. None of the government’s “stimulus” is going to help the housing market. It has to adjust back to the level where it is affordable to potential home buyers. And, since real wages have been flat for quite a while, housing has to come down some more in many areas.

      That’s an intersting solution to allow people to use other currencies. With the way technology has advanced and Forex trading has taken off, that may not be too far fetched. I don’t suspect the IRS, Treasury and other agencies would be too fond of this.

    1. Barb,

      I am trying to figure out ways to shield more of my assets from inflation. I want to buy a second property, but houses are still way too expensive in the O.C. With the recent record earning for companies, I am hoping my stocks will pop. We are heading into crazy times.

  7. I think your bottom line is very rich. Increasing public discourse only serves to increase our understanding of what the Federal Reserve’s role really is and what do we really want it to be in the future. It’s very interesting because I never heard so much about QE until the last 3 months. I do think our awareness of such economic issues is increasing, which is a very good thing. Hopefully, we will restore fiscal pragmatism soon.
    Roshawn @ Watson Inc recently posted..The Rich Get RicherMy Profile

    1. Shawn,

      It’s funny because my Mom said the same thing. She hadn’t even heard of QE2 and she is in the TEA Party and watches the news daily. Except for the financial news, most people weren’t aware of this new round of easing. I’m glad it’s starting to get some attention and I hope it ultimately get derailed.

  8. The Treasury credit’s money in to the banking system not the FED. QE2 is not inflationary and does not increase the money supply. Its a swap.

    The FED is owned by its share holders (It’s public) but its pays back 98% of its income to the Government.

    The FED should be audited there is to much we don’t know. The FED manipulates Interest rates in a free economy that is a contradiction and has caused bubbles and depressions. The FED cheats savers with 0% rates to recapitalizes the Investment Banks. It also encourages money to move out in other countries that offer better rates. “Carry trade” Artificial rates created malinvestments and the illusion of prosperity.
    As risk went up the FED lowered rates. Would any rational person do that in a free real economy?

    1. Clever name Adam.

      My understanding is the Treasury credited over $3 Trillon dollars into the banking system during the crisis, which is a lot more than the $800 Billion dollars they told the public during the bailout.

      That is why they are dragging their feet on the limited audit called for in the Dodd-Frank reform and another good reason this information should be made public.

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