American citizens who are concerned about the lack of transparency in the nation’s monetary and fiscal policy should prepare themselves for another central banker whitewash. The current financial reform package making its way through Congress is set to expand the powers of the very entity directly responsible for the creation of huge moral hazards which are at the heart of the current financial crisis. This is the same central bank that is involved in the current market distortions gripping the globe. They were directly involved in the creation of asset bubbles, such as housing, that inevitably burst causing great economic pain for everyday people. The current language of the financial reform bill (which some have noted creates a permanent bailout authority) excludes the Paul-Grayson Amendment that would ensure a full audit of the Federal Reserve.
Congressman Ron Paul, sponsor of H.R. 1207 or the “Audit the Fed” bill had the following to say about the potential exclusion of his amendment from the reform bill:
“This Financial Reform bill is set to grant sweeping new powers to the Federal Reserve, which has made a mess of our economy. If my colleagues insist on expanding the power of the Fed, the very least they can do is require the Fed to be transparent rather than secretive in its actions. Luckily, many of the conferees already have demonstrated their concern about transparency by cosponsoring HR 1207, and hopefully those conferees will insist on full transparency in the conference report.”
During the summer of 2009 when the Audit the Fed bill was picking up steam, Ben Bernanke was out shilling for the central bank using tried and true scare tactics in hopes of avoiding a full audit. Bernanke said then:
“My concern about the legislation is that if the GAO is auditing not only the operational aspects of the programs and the details of the programs but making judgments about our policy decisions would effectively be a takeover of policy by the Congress and a repudiation of the Federal Reserve would be highly destructive to the stability of the financial system, the Dollar and our national economic situation.”
This is a method as old as central banking itself. It is patently absurd to claim that taxpayers have no right to know what crony’s pocket their hard earned money goes. It is equally absurd to say that a market is more stable when investors have less information. Basically, the Federal Reserve in the past has said that people investing in a company such as Citibank (which received unprecedented help from the Fed) would be better off not knowing the financial outlook and stability of Citibank, just hand them your money. Only to the Federal Reserve does this make sense. It is the same as saying to a potential investor “you can not look at our balance sheet.” Investing is about information and forecasting, but the Federal Reserve does not seem to think so.
These tactics the current central bank is using (which includes hiring former Enron lobbyist Linda Robertson) are comparable to Nicholas Biddle who made the same fear mongering threats when Andrew Jackson announced his desire to repeal the 2nd Bank of the United States’ charter. Biddle said repealing the charter would “crash the economy.” What he really meant is he would crash the economy by retracting the money supply quickly. Biddle stated:
“This worthy President thinks that because he has scalped Indians and imprisoned judges, he is to have his way with the Bank. He is mistaken.”
Biddle also threaten the people of the United State with a depression when he said:
“Nothing but widespread suffering will produce any effect on Congress. Our only safety is pursuing a steady course of firm restriction (of the money supply) – and I have no doubt that such a course will ultimately lead to restoration of the currency and re-charter of the Bank.”
This braggadocios central banker made good on his promise and purposefully contracted the money supply and sent the economy into a panic and then recession. Biddle later admitted he had personally caused the crash. He was subsequently charged with fraud in causing the panic but his acquittal was bought by European central bankers the same way it is presumed Richard Lawrence had his insanity acquittal bought by European central bankers after the assassination attempt on Jackson.
The historical battles the people and their servants had with the central bank are being replayed in a modern setting. When contemplating the necessity and utility of the Federal Reserve, Americans should consider the what is the intent of the Federal Reserve. The Federal Reserves main missions and mandates are to prevent panics, recessions and depressions and to provide a sound, strong dollar. Here is a short US economic history prior to and since the Federal Reserve has come into existence so readers can judge for themselves. First the American economy since 1913 (the year of the Federal Reserve Act):
– Post-WWI recession – marked by severe hyperinflation in Europe over production in North America. Very sharp, but also brief.
– Great Depression (1929 to late 1930s), stock market crash, banking collapse in the United States sparks a global downturn, including a second but not heavy downturn in the U.S., the Recession of 1937. Durations: 43 and 13 months respectively.
– Recession of (1945) Duration: 8 months
– Recession of (1948 – 1949) Duration: 11 months
– Post-Korean War Recession (1953 – 1954) – The Recession of 1953 was a demand-driven recession due to poor government policies and high interest rates. Duration: 10 months
– Recession of (1957 – 1958) Duration: 8 months
– Recession of (1960 – 1961) Duration: 10 months
– Bond Inversion of (1965 – 1967) no recession materialized
– Recession of (1969 – 1970) Duration: 11 months
– 1973 oil crisis (1973 – 1975) – a quadrupling of oil prices by OPEC coupled with high government spending due to the Vietnam War leads to stagflation in the United States. Duration: 16 months
– 1979 energy crisis – 1979 until 1980, the Iranian Revolution sharply increases the price of oil
– (1981 – 1982) Duration: 16 months
– Early 1980s recession – 1982 and 1983, caused by tight monetary policy in the U.S. to control inflation and sharp correction to overproduction of the previous decade which had been masked by inflation
– Great Commodities Depression – 1980 to 2000, general recession in commodity prices
– Late 1980s recession – 1988 to 1992, collapse of junk bonds and a sharp stock crash in the United States leads to a recession in much of the West
– Japanese recession – 1991 to present, collapse of a real estate bubble and more fundamental problems halts Japan’s once astronomical growth
– Asian financial crisis – 1997, a collapse of the Thai currency inflicts damage on many of the economies of Asia
– Early 2000s recession – 2001 to 2003: the collapse of the Dot Com Bubble, September 11th attacks and accounting scandals contribute to a relatively mild contraction in the North American economy.
– Global financial depression – 2007 to present: the collapse of the mortgage market and secondary securities market contribute to the first global drop in GDP since the Great Depression.
So in 97 years of having a central bank that was supposed to prevent panics, recessions and depressions we have had all of these “downturns”, most were due specifically to our financial and monetary policy. In the same time frame the dollar has declined by about 97%, 30% of that in the last 10 years alone.
In the 149 years prior to having our own central bank (yet central banking being the norm in Europe dominated by the Rothschild Banks such as the Bank of England) we had only the events listed below. If you take note, most were merely panics or originated outside of the US where other central banks happen to manipulate markets such as the Long Depression and the Depression of 1764 caused by the Bank of England and the Crown preventing the colonies the right to their own currency. We have had a lot more turbulence in markets since the creation of the Federal Reserve. Much of the late 19th century’s economic issues were during a period of a gradual centralization and government consolidation of the banking industry. It is a widely accepted theory that J.P. Morgan himself, as an agent of the Rothschild central banks help to cause the Panic of 1907 to force the Federal Reserve Act on the people. For most of the 1800s the U.S. was a booming deflationary economy that built our great economic power and easily surpassed Europe in industrial might despite beginning our industrialism much later than Europe. We invested in our productive capacity prior to central banking in America and the banking industry as a whole was responsive to the capital needs of the communities they served. Now we invest in insider bailouts and the corruption of a privileged class.
– Depression of 1764 (1764 – 1783) – England’s Currency Act of 1764 removed the American colonies’ right to issue Colonial Scrip, a credit-based money. The destroyed money supply caused a depression that ignited the American Revolution.
– Panic of 1797 (1797 – 1800), Bank of England’s deflation crosses the Atlantic and disrupts commercial and real estate markets in the colonies and Caribbean.
– Panic of 1819 (1819 – 1824), the first major financial crisis in the United States.
– Panic of 1837 (1837 – 1843), a sharp downturn in the American economy caused by bank failures and lack of confidence in the paper currency
– Panic of 1857 (1857 – 1860), failure of the Ohio Life Insurance and Trust Co. bursts a European speculative bubble in U.S. railroads and loss of confidence in U.S. banks
– Panic of 1873 (1873 – 1879), economic problems in Europe prompt the failure of Jay Cooke & Company, the largest bank in the U.S., bursting the post-Civil War speculative bubble
– Long Depression (1873 – 1896), begins with the collapse of the Vienna Stock Exchange and spreads throughout the world. Some historians do not believe it is actually one large recession. It is important to note that during this period the global industrial production greatly increased. In the US for example, industrial output increased 4 times.
– Panic of 1893 (1893 – 1896), failure of the U.S. Reading Railroad and withdrawal of European investment leads to a stock market and banking collapse. Duration: 17 months
– Recession of (1895 – 1897) Duration: 18 months
– Recession of (1899 – 1900) Duration: 18 months
– Recession of (1902 – 1904) Duration: 23 months
– Panic of 1907 (1907 – 1908), begins with a run on Knickerbocker Trust Company stock October 22nd 1907 sets events in motion that will lead to a depression in the United States. Duration: 13 months
What has been successful about the Federal Reserve? Is economic stability created by having a cabal of central bankers handing away the nation’s money in complete secrecy? Do they deserve the unaccountable power they are already vested with or should we as a nation return to a Constitutional monetary system? Forget what the central bankers tell you, for they want complete control over the chief commodity of any economy, it’s currency. What do your eyes see?
Central Banking is not part of any legitimate free market, it is however a plank of Communism and necessary for a Command Economy. Banks under the Federal Reserve System are nothing but preferred vendors of government services and have ceased serving the productive communities in which capital originates. This is a fundamental flaw in banking centralization that will always lead to market distortions, panics, crisis, recessions and depressions. Do we really need them to indebt, steal from us with inflation and bailouts and enslave us with an income tax when they serve no value to society as a whole?