H.R. 2755 to Abolish the Federal Reserve

http://www.picassodreams.com/picasso_dreams/2007/06/hr_2755_to_abol.html ^ | June 17, 2007

[keyd]

June 17, 2007

H.R. 2755 to Abolish the Federal Reserve

If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good, makes the bill good, also. The difference between the bond and the bill is the bond lets money brokers collect twice the amount of the bond and an additional 20%, where as the currency pays nobody but those who contribute directly in some useful way. Is it absurd to say that our country can issue $30 million in bonds and not $30 million in currency? Both are promises to pay, but one promise fattens the usurers and the other helps the people.” - Thomas Edison

“Banking was conceived in iniquity and born in sin. Bankers own the earth; take it away from them but leave them with the power to create credit, and, with a flick of the pen, they will create enough money to buy it all back again. Take this power away from them and all great fortunes like mine will disappear, and they ought to disappear, for then this world would be a happier and better world to live in. But if you want to be slaves of bankers and pay the cost of your own slavery, then let the bankers control money and control credit.” - Lord Stamp, Director of the Bank of England, 1940

“I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is now controlled by its system of credit.

We are no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men.” - Woodrow Wilson, 1919 (Referring to the Federal Reserve and the transition to a debt-based economy)

“The stock of money, prices and output was decidedly more unstable after the establishment of the Reserve System than before. The most dramatic period of instability in output was, of course, the period between the two wars, which includes the severe (monetary) contractions of 1920-21, 1929-33 and 1937-38. No other period in American history contains as many as three such severe contractions. This evidence persuades me that at least a third of the price rise during and just after World War 1 is attributable to the establishment of the Federal Reserve System… and that the severity of each of the major contractions - 1920-21, 1929-33, and 1937-38 - is directly attributable to acts of commission and omission by the Reserve Authorities… Any system which gives so much power and so much discretion to a few men, (so) that mistakes - excusable or not - can have such far reaching effects, is a bad system. It is a bad system to believers in freedom just because it gives a few men such power without any effective check by the body politic - this is the key political argument against an independent central bank… To paraphrase Clemenceau, money is much too serious a matter to be left to the central bankers.” - Milton Friedman, Nobel Prize winning economist.

Presidential candidate and Congressman Ron Paul (R-TX) introduced H.R. 2755 “To abolish the Board of Governors of the Federal Reserve System and the Federal reserve banks, to repeal the Federal Reserve Act, and for other purposes.”  This legislation would help to restore the U.S. Constitution, which mandates that only Congress can coin money (Article I, Section 8, Clause 5), and that US debts be settled in silver and gold Article I, Section 10, Clause 1).

This is the second time he has introduced legislation.

Given that one out of six Americans works for government (local, state and federal) or an organization/corporation that receives the majority of its revenues from government, it is easy to see why this news isn’t considered newsworthy for the mainstream press. Government workers are dependent upon the printing presses. Politicians certainly don’t want the dissolution of the Fed. They borrow money from the bankers and make your great grandchildren pay interest on the debt so they can “bring home the pork”. You did not participate in these loans, you receive no financial benefit from these loans, nor did you sign any contracts making you responsible for the debt, but you and future generations will be forced to pay until Congress dissolves the Fed or there is revolution. There is no other choice.

[Toddsterpatriot]

Goldbug logic. It’s a curious thing.

[theBuckwheat]

>>
Do you still think inflation will cause a drop in the money supply?
<<

The immediate act of borrowing money into circulation (a more accurate term to describe what happens when government creates money out of thin air), is an act of inflation. It is the very definition of inflation.

However, in a fiat money/central bank/fractional reserve banking (FRB) monetary environment, the very structure of FRB is one of leverage on the money supply. Banks that are allowed to practice fractional reserve banking also create money out of thin air based on the leverage that the “reserve ratio” implies. (leverage ~= 1-d/d)

On the upside, when private wealth increases, demand deposits increase and the bank can leverage those deposits (according to the reserve ratio) into new loans from which it earns interest and fees. This new money is the very same as if the government had printed it. It serves to bid up prices of goods and services.

But on the downside after the predictable “recession”, when private wealth decreases, the very same leverage has the opposite effect on loan creation, which is to say that fewer demand deposits reduce the ability (and willingness) of the bank to grant new loans, and that reduction is subjected to the very same multiplier, operating in reverse. This is a “contraction”.

This occurs during inflation, like is are happening at this very moment in Zimbabwe where inflation may hit 1.5 million percent. [1] Anyone who can convert their money wealth into something else such as gold, other currencies, hard assets like a tank of gasoline, a bag of grain, will do so. The local currency becomes worthless even as the nominal amount skyrockets. So the locals stop using it as much as they can. The nominal currency will keep hyper-inflating, but the amount of wealth it monetizes will plummet. This is why I wrote that inflation (and I was speaking of the extreme kind), can actually cause a drop in the money supply. Hyper-inflation causes the ultimate “drop” in the money supply when the currency collapses and will no longer be accepted by anyone. Its value drops to that of toilet paper and the government, if it survives, will take drastic steps to issue a currency, usually one with a different name, maybe even liked to the value of a hard currency like the dollar.

I am sure that everyone recalls the pictures of Germans with wheelbarrows of paper currency, money that became more valuable for fuel in the stove than for spending in the store.

[1] see: http://news.google.com/news?hl=en&ned=us&q=zimbabwe+inflation&btnG=Search+News

[Toddsterpatriot]

On the upside, when private wealth increases, demand deposits increase and the bank can leverage those deposits (according to the reserve ratio) into new loans from which it earns interest and fees. This new money is the very same as if the government had printed it. It serves to bid up prices of goods and services.

When private wealth increases, there are more goods and services being created, driving down the prices of goods and services.

But on the downside after the predictable “recession”, when private wealth decreases, the very same leverage has the opposite effect on loan creation, which is to say that fewer demand deposits reduce the ability (and willingness) of the bank to grant new loans, and that reduction is subjected to the very same multiplier, operating in reverse. This is a “contraction”.

Very interesting. Not what you said before (money supply contracts during inflationary periods causing deflation) so what's your point?

This occurs during inflation, like is are happening at this very moment in Zimbabwe where inflation may hit 1.5 million percent

Yes, inflation, increased money supply. Again, so what? Where is the deflation in your Zimbabwe example?

Hyper-inflation causes the ultimate “drop” in the money supply when the currency collapses and will no longer be accepted by anyone.

LOL! Just admit you were wrong. Your spinning is making me dizzy.

[Moonman62]

Its value drops to that of toilet paper and the government, if it survives, will take drastic steps to issue a currency, usually one with a different name, maybe even liked to the value of a hard currency like the dollar.

The dollar is hard currency? Not long ago you were calling it worthless paper.

[Moonman62]

The public would not accept that a few people who were smart enough to hold gold today would be the beneficiaries of such a happenstance gain.

LOL, no that's not the reason.

[iconoclast63]

Thank you Buckwheat, for you clear understanding of the system. Rather than get sidetracked by the waste of time of debating minute details with Todd, I would rather just remind everyone that it's the system itself that is the problem, not the individual statistics.

Despite apologists to the contrary, the system is, in and of itself, unjust as it gives unfair advandtage to the banking business over any other enterprise. There is no "expert", versed in the structure of the global financial system, who would deny that central banks work in concert with privately owned banks to make the process of money creation a profitable business. Rather than being a neutral measure of economic activity, currency yeilds profits to banking institutions through the process which creates it. That profit opportunity stems from the debt based nature of money.

While banks enjoy a virtual monopoly on money creation, allowing them to exponentially increase the over-all supply, government also enjoys a blank check as it's reward for giving that power to banks.

Here is an interesting perspective, from a book called "The Grip of Death, by Michael Rowbotham:

" For example, every country in the world suffers from a massive and constantly increasing national debt. Britain has a national debt that is fast approaching £400 billion. Canada's debt has reached $560 billion and Germany's now exceeds 500 billion deutschmarks. So are these poor countries? No more so than Japan with a debt equivalent to two trillion dollars or America with a national debt now in excess of five trillion dollars. Since the poorer nations are crippled by their indebtedness to international lending institutions and foreign banks, the overall picture is of a world suffering acute and ever worsening insolvency.

But this is really quite illogical and absurd... The question almost asks itself. If all the nations of the world are in debt, who are they in debt to? Rationally, where there is a debtor, there should be someone else who is a creditor. If every nation is in debt, who, precisely, owes whom? In addition to the logical absurdity of all nations being simultaneously insolvent, such escalating national debts are a complete contradiction of the real and obvious wealth of these nations. This is underlined by the fact that the nations which run the largest national debts are those with the most advanced economies. What can we say to the developing nations struggling under the burden of their debt, nations who have copied our economic institutions and aspire to a life free from poverty? 'Work hard, and one day your debt will be as small as America's - a mere five trillion dollars!"

Or this from Stephen Zarlenga, of the American Monetary Institute:

Monetary realities usually affect the citizen’s daily life far more than the Congress, President, or Supreme Court. AMI’s research shows that a main arena of human struggle has been over the monetary control of societies. This control is exercised through monetary theory - in obscure doctrines about the nature of money. If it had to be summarized in one sentence it is that by mis-defining the nature of money, special interests have often been able to control a society’s monetary system, and in turn, the society itself. Describing how this has been done historically, makes these concepts clear and vital and sweeps aside the mystification in which money has been purposely shrouded.

[Moonman62]

Despite apologists to the contrary, the system is, in and of itself, unjust as it gives unfair advandtage to the banking business over any other enterprise.

If that's the case then the banking sector should outperform all others year after year. Is that the case?

[iconoclast63]

Yes, logically speaking, and you will find that certain financial institutions have demonstrated remarkable resiliency over the past decades, even centuries, like Chase and Citi and Goldman Sachs, Lehman Bros, etc..

But it is also important to understand that banks operate under different accounting rules than other businesses. I cannot give you details of the differences but I do know that they are different.

Typically banks talk about assets and reserves rather than revenues and profits.

I may be speculating here but it would not surprise me in the least to learn that GAAP rules for banks are different because it helps them hide their advantage.

I realize that kind of comment makes me look like a tin foil hat wearing conspiracy nut and I hate to give that impression. I have read the history of the money power vs the people, and, bottom line, it's not a conspiracy if it's true.

[theBuckwheat]

I would say that the largest beneficiary of the existing monetary system is government, because it is able to print money at almost no cost for which it can pay for goods and services from the very people whose wealth the money exists to be a medium of exchange for. Fiat money is counterfeit private wealth.

Secondly, government gets to issue sovereign debt, and force citizens to guarantee it by (unstated) future taxes and assets that can be acquired because of the last way that fiat money insults liberty: government defines income as the nominal increase in dollars. It levies a capital “gains” tax on assets that may have only increased in nominal dollars to track inflation and caps the insult by various rules to make the tax “progressive” without adjusting the limits, adjustments, brackets, exclusions, etc. for the very inflation that only government can control.

(All this of course is reduced or even eliminated with a the Fair Tax, but that is another thread.)

The end result is that government issues debt that it uses to spend and for which it never intends to really repay. It rolls expiring old debt into new debt. In the end it may only be left with repudiation as a way out. Since they “knew or should have known” (a common legal standard in torts) that this was the easily foreseen outcome of their policies, it is a grand theft on the greatest scale in human history.

[ovrtaxt]

http://www.augustreview.com/index.php

Some good info on international banking and the worldwide central bank power structure.

[iconoclast63]

According to the Federal Reserve the total money stock in the United States in January of 1959 was $292 billion. In February of 2006, the last month the Fed chose to report the statistic, that number had grown to $10,276 billion. In 47 years the total supply increased by a factor of 35.

Combine this with the fact that 95% of all money created is put into circulation by private banks in the form of loan, there can be little debate about whom the largest beneficiaries of the current system are. Without question it is the banks. No doubt about it.

[Toddsterpatriot]

Rather than get sidetracked by the waste of time of debating minute details with Todd,

It's true, feelings are easier than facts.

There is no "expert", versed in the structure of the global financial system, who would deny that central banks work in concert with privately owned banks to make the process of money creation a profitable business.

Who makes the profit?

[WhiteGuy]

Dr. Paul is my hero!

[Toddsterpatriot]

I would say that the largest beneficiary of the existing monetary system is government, because it is able to print money at almost no cost for which it can pay for goods and services from the very people whose wealth the money exists to be a medium of exchange for.

Are you claiming the Federal Reserve prints money so they can buy stuff? How much stuff does the Federal Reserve buy every year?

government defines income as the nominal increase in dollars. It levies a capital “gains” tax on assets that may have only increased in nominal dollars

Yes, the tax system sucks. Capital gains taxes should be indexed for inflation or ideally capital gains should be untaxed.

(All this of course is reduced or even eliminated with a the Fair Tax, but that is another thread.)

Geez, a Fair Taxer too. LOL!

Please explain how the Fair Tax would stop the government from causing inflation?

In the end it may only be left with repudiation as a way out.

Or it may not. String 'em up!!! LOL!

[Toddsterpatriot]

In 47 years the total supply increased by a factor of 35.

Assuming your stats are correct, that's a 7.9% annual growth. Is that too much? What would the proper growth rate be?

Combine this with the fact that 95% of all money created is put into circulation by private banks in the form of loan

What's the alternative? All loans should come from government?

[expat_panama]

...there can be little debate about whom the largest beneficiaries of the current system are. Without question it is the banks...

You're saying that the people who made the most money since 1959 were those that owned banks?

[ERNESTBELOK]

It is so easy to change our government, My wife and I have participated and each time we have, the government changed their mind to reflect our will.

Email your representative, fax them and call them.
Your voice counts for 13,000 voices!

It is worth one hour of your.

[cabeyer]

On 6/18/07 you wrote:

If I deposit $1000 into the bank, how much can the bank loan out based on my deposit? How much money can they “CREATE”?

I’m no expert on this, in fact, I’m learning a lot from all of you here, but I believe it was in the Documentary entitled “The Money Masters” where it talked about fractional banking. And, from what I recall, fractional banking allows the banks to “lend out” $10 for every $1 that is deposited.

So, in your example of depositing $1000, the bank would be able to lend $10,000...If that isn’t “Money For Nothing”, then I don’t know what is.

Technically, it may not be considered “CREATING” money, because the banks aren’t able to create money out of thin air....First, an amount must be deposited.

Yes, you could definetly withdraw your $1,000 the next day, but theoretically, the bank could have already “lent out” the $10,000 on your $1,000 deposit.

Keep in mind that there is enough deposited money in the bank to satisfy the excess money lent out which has been permitted under the rules of fractional banking.

Also, keep in mind that the banks these days pay you an interest rate of about 0.2% on your savings account, yet they charge borrowers 8% or more. Quite a hefty profit these banks are making for money they were able to “create” through fractional banking, wouldn’t you say?

I remember the days when savings accounts in banks drew 5% interest, but those days are long gone...At least, 20 years ago....Whatever happened to those days?

The only way the banks could possibly lose out on fractional banking, is if EVERY depositer withdrew all their money at the same time...Then, the banks would not be able to cover their loans and the bottom would fall out and the bank would fail.

[webecrashingnow]

It has been amusing reading year old posts on this subject.

This is now the year 2008 and the dollar is in a death spiral down. That means prices are shooting up at 5-10% every quarter or so. So it seems logical that the arguments against the FED are right on track.

Record home foreclosure's means the banks ARE getting huge amounts of land in American towns and cities.

I hope that "moonman" guy (and a few others) put all his money into stocks like he said (mr investor cause they are smarter than "us" people) because they are also in a death spiral down. Nothing like raw justice eh?

A barrel of oil is over $102 today and everything is starting to tank along with it. So now the prez wants to give away money to each of us to help the economy out of it's "adjustment" when really it will only slow down the crash until he is safely out of office.

What in the world will I spend my free $600 on? hummmmmm maybe ammo and vegetable seeds.

I guess more war is our future. Only the war is against our liberties until we are a voiceless mass looking up at our masters who own everything. Welcome to the New World Order people.

Don't say you weren't warned.

[tpierson18]

The world was/is not ready for Ron Paul, just yet. Ron Paul you have to run again next term.