In Article 1, Section 8 of the United States Constitution, our founding fathers gave Congress the sole authority “To coin money [and] regulate the value thereof.” In addition, in Section 10 of Article 1, they also proclaimed that “No state shall…coin money; emit Bills of Credit; [or] make any thing but gold and silver coin to tender in payment of debt.”
Previous experience had demonstrated to the founders that sound money issued and regulated by a recognized governmental authority was necessary to ensure prosperity and encourage economic growth. Colonial America had experimented with paper money, but they discovered that it tended to lose its value over time because it was too easy to issue and therefore inflationary. They preferred hard money because it was minted from something already valuable that could only be found in limited supplies.
But keeping the government in control of the money supply was considered even more fundamental than limiting the forms of specie. As Thomas Jefferson put it:
If the American people ever allow private banks to control the issuance of their currency, first by inflation and then deflation, the banks and corporation that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered.
For Jefferson, and others who understood the nature of the threat, the American monetary system was seen as sacrosanct, as something much too important to be delivered into the hands of those who would attempt to make money from money by practicing the ancient art of usury.
The Long War
Right from the beginning of the American experiment in self-government, the determination of the private banking industry to eventually gain control of the money supply never waned. Despite the efforts of powerful opponents such as President Andrew Jackson and Abraham Lincoln (who fought against the financiers in very different ways) as the decades passed banks gained more and more control over the U.S. economy. Two attempts to form national banks to control the banking system ultimately failed, and whether or not it would have been possible to keep those banks from ultimately being dominated by private financiers anyway is a question with no clear answer. At any rate, the banking industry went largely unregulated throughout the nineteenth century, a situation that opened the floodgates for excessive speculation and profiteering and inevitably led to a series of inflationary booms and deflationary busts that derailed the rising industrial and farm economies time and time again – which of course is exactly what Jefferson had predicted would happen.
As the nineteenth century drew to a close, a few large and powerful banks had emerged from the muck and the chaos to dominate the financial landscape, and the barons who headed these highly profitable institutions – most notably that quintessential example of the miserly banker, J.P Morgan – used their deep pockets and ability to influence the overall functioning of the economy to gain more and more control over politicians and the American political process. After beating back their main protagonists (the financial-reform minded Populists) in the late nineteenth century, the big bankers began to push hard to try and gain even more control over the U.S. monetary system than they already had. When the economy collapsed and deflated during the financial Panic of 1907, they saw a golden opportunity (no pun intended) to make their big move. In a demonstration of great beneficence (sarcasm intended), Morgan and the rest of the bunch injected their own funds into the economy to prop up the failing banking system and keep the economy afloat.
Far from being beneficent, this move was actually an important step in the ultimate end game. The big bankers used the Panic of 1907 to prove how indispensable they were to the workings of the economy, and after their 1907 intervention they and their Congressional stooges introduced a bill that would create a privately run central bank to assume control over the money supply and the U.S. financial system. But the financiers had underestimated the strength of their opposition, led by former Democratic presidential nominee and Populist standard-bearer William Jennings Bryan, who rallied the troops in Congress and helped fight off this attempt by the moneychangers to gain entrance to the U.S. financial temple.
In the end, the bankers and their elected minions found a way to outfox their opposition, including their old enemy Bryan. They brought the bill back into Congress in a new form, this time filled with so much dense verbiage and convoluted language that it was barely comprehensible to anyone, especially those who would be most likely to oppose it. Their trickiest move was to give authority for coining or printing money to the U.S. Bureau of Engraving and Printing, which helped to obscure the fact that the new Federal Reserve, as the proposed central bank was to be called, would be a private and not public institution. Even Bryan was fooled, and after much lobbying from President Woodrow Wilson, who had named Bryan his Secretary of State after winning election in 1912, Bryan publicly proclaimed his support for the new “Federal” Reserve, which actually wouldn’t be federal at all. Just two days before Christmas, on December 23, 1913, President Wilson signed the Federal Reserve Act into law; officially creating the consortium of twelve private banks that controls the U.S. financial system to this very day.
The Nature of the Beast
In a way, you really have to admire the cheekiness and brazenness of the big bankers. It was their industry that had created an economy dominated by cycles of boom and bust, and yet they somehow convinced Congress and a supposedly progressive president that giving them control over a system that they had repeatedly messed up actually made sense. Of course, the creation of the Federal Reserve has not stopped the boom and bust cycles from coming, as both the Great Depression of the 1930s and the Great Undeclared Depression that we are currently experiencing help to prove. By loaning money to the government at interest and helping to reinforce the fractional banking system to the point of impregnability, the Federal Reserve has done exactly what turn of the twentieth century financiers wanted it to do – chain us all to endless accumulating debt that can never be paid off, allowing the financial industry to get richer and richer while gaining control over more and more of our collective assets.
Just looking at the federal government’s debt alone, of the $14 trillion that is owed, about $8 trillion is actually owed as interest, which would never have existed if the government had followed its constitutional mandate to control the money supply in order to keep it out of the hands of those who profit handsomely from usury. Because all new money is created through fractional reserve banking (banks are allowed to lend $10 for each dollar they hold in the form of reserves, which means they are actually creating money out of thin air whenever they “lend” it to someone), our money now comes into existence with compound interest automatically attached, meaning that the amount of debt owed will always exceed the amount of money in circulation. And because interest compounds, the hole we are all buried in just keeps getting deeper and deeper, as public and private debt goes higher and higher.
There have been two serious attempts over the years to eliminate the Federal Reserve. The first occurred in 1936, when a bill was introduced in the House of Representatives that would have returned control of the money supply to Congress, with various mechanisms set up to ensure that the amount of money put into circulation would preserve “a fixed and equitable purchasing power of the dollar” while at the same time guaranteeing the supply of currency would remain “ample at all times to enable the people to buy wanted goods and services at full capacity of the industries and commercial facilities of the United States.” Even though this bill was introduced at the height of the New Deal, when the spirit of fundamental reform was at its highest, the power of the banks had grown to such a level that there was really no chance to stop them legislatively, which is why this bill ultimately went nowhere.
The second serious attempt to break the power of the Fed was undertaken by President Kennedy, who avoided the problem of Congressional incalcitrance by taking matters into his own hands and issuing Executive Order 11110 on June 4, 1963. This decree gave the Treasury the power to issue silver certificates against all the silver it held in storage, in order to create an alternate form of currency to Federal Reserve notes. This program put $4.3 billion dollars into circulation within a relatively short period of time, but when President Kennedy was assassinated in November of that same year, the new president had no interest in enforcing an executive order that could have eventually put the Federal Reserve out of business.
Questioning the Unquestionable
At the present time, it would seem that the current system is so firmly entrenched that not only cannot it not be changed, but any criticism of it is treated in the mainstream media and in government as little more than the eccentric ravings of fools, madmen, or libertarian presidential candidates. But the encouraging thing is that the numbers of those who recognize the disastrous effects that privatization of the financial system has had is growing, and the people who fall into this category represent a wide variety of different ideological viewpoints. This raises at least a glimmer of hope that someday the majority will demand an end to the domination of the economy by unelected financiers who are not accountable to anyone except those who hold stock in the twelve Federal Reserve banks.
And just who exactly are these stockholders? The answer should surprise no one – the Fed’s stockholders are the private banks, of course, both foreign and domestic. J.P. Morgan himself couldn’t have concocted a better scheme than this one.
©2012 Off the Grid News