The Federal Reserve System was established by a President Woodrow Wilson's decree in 1913. The premise used was to "supplant the dictatorship of the private banking institutions" and "to stabilize the inflexibility of national bank note supplies". The previous system of banking was "feudal" in nature, in which private bankers controlled communities and issued their own bank notes. They had little regulations concerning reserve assets and loan policies.
As soon as Federal Reserve was established, a new currency was issued - Federal Reserve notes, which at the time were based on the gold standard. The Federal Reserve (also called The Fed ) was to unite and supervise the entire banking system, control the expansion or contraction of currency, and regulate the flow of money to the commercial banks through the establishment of 12 Federal Reserve Banks.
But what was established looked just like a Cartel that had banking interest in its center.
The Fed is controlled by private banking interest and by Presidential appointment - but it is still a private organization and not a government entity. In 1913, President Wilson's creation of the Federal Reserve System established a three-tier monetary system in the United States - the holders of money (public, government, business and institutions); the commercial banks that borrow from the public and issue loans; and the central bank or Federal Reserve that has a monopoly on the issuing of money. The Federal Reserve is technically owned by the commercial banks.
FEDERAL RESERVE CONTROLS THE MONEY, NOT THE GOVERNMENT
The monetary policy of the United States is the domain of the Federal Reserve Bank and not the government. This process is in direct contradiction of the U.S. Constitution that reposes the responsibility of the monetary system with the Congress of the United States.
On April 27, 1936, hearings were held by the House Committee on Banking and Currency. The preamble of the bill - HR 9216 of the Seventy-fourth Congress, states, "The committee had under consideration the bill (HR 92163 to restore to Congress its constitutional power to issue money and regulate the value thereof; to provide monetary income to the people of the United States at a fixed and equitable purchasing power of the dollar, 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; to abolish the practice of creating bank deposits by private groups upon fractional reserves, and for other purposes."
The Congress also attempted to issue non-interest bearing Treasury Notes. A Federal Credit Commission linked to the Secretary of the Treasury was the goal of Congress. The concern was that banks were issuing loans without the backing of real deposits and that it was controlling money based on the price it attracted on international money markets or by the amount of interest they could charge. The Congress wanted to withdraw from the banks the right to issue credit on fractional reserves, and leave the banks the right to issue credit on account of actual deposits, which means that permanent money will be loaned not bank manufactured money.
The bill would have eliminated the private manufacture of money - a direct contravention of the mandate of the Constitution, which places the right to coin money in the hands of Congress.
PAYING OFF THE NATIONAL DEBT
The bill would have allowed the nation to pay off its national debt and stay out of debt. In one year's time, with this bill, the national debt could have been paid, and without any tax increases, plus it would have allowed for full employment. You could have guessed that this bill never became law in 1936 - the banking interest was too powerful.
KENNEDY TRIED TO CHANGE IT
In 1963, President John Kennedy wanted an end to the Federal Reserve System, which had a strangle-hold on the United States and virtually the world. By a simple stroke of the pen, President Kennedy dismissed the Federal Reserve System and ordered the U.S. government to restore its Constitutional-mandate of controlling the money. President Kennedy was dead three weeks later. When President Lyndon Johnson took office, he immediately rescinded Kennedy's order and The Fed won another round.
FOREIGN BANKERS OWN MAJORITY OF FEDERAL RESERVE
More that half the shareholdings in the Federal Reserve Bank are controlled by large New York City banks, including National City Bank, National Bank of Commerce, First National Bank, Chase National Bank, and Marine National Bank. When Rockefeller's National City Bank merged with J.P. Morgan's First National Bank in 1955, the Rockefeller group owned 22% of the shares of the Federal Reserve Bank of New York, which in turn holds the majority of shares in the Federal Reserve System - 53%. But who really owns what? Here are the top controllers of the Federal Reserve Bank:
1. Rothchild banks of London and Berlin.
2. Lazard Brothers Banks of Paris.
3. Israel Moses Seif Banks of Italy.
4. Warburg Bank of Hamburg and Amsterdam.
5. Lehman Brothers Bank of New York.
6. Kuhn, Loeb bank of New York.
7. Chase Manhattan Bank of New York, which controls all of the other 11 Federal Reserve Banks.
8. Goldman, Sachs Bank of New York.
This ownership combination has been challenged by the Federal Reserve Bank, but a study of Standards and Poors will verify the ownerships. This means that the controlling interest of United States national monetary system is foreign.
In 1797, John Adams wrote to Thomas Jefferson, "All the perplexities, confusion and distress in America arise, not from defects of the Constitution or Confederation; not from any want of honor or virtue, as much as downright ignorance of the nature of coin, credit and circulation."
In simple terms, the United States Government borrows money from the Federal Reserve Bank with interest. Here is how it works: The Government wants $1 billion. The Federal Reserve prints $1 billion - based upon no hard asset - and lends it to the Government at a high interest rate. The bank did not have the original money, it created it and made a bookkeeping entry - like you writing yourself a check without funds and cashing it. The Fed controls the flow of money, making it tight and creating unemployment or printing more than actually exists and creates inflation. It is, in essence, a paper corporation, which controls the entire economic well-being of the nation.
Let's say you placed a deposit of $10,000 into a bank. A bank now can lend this money. But not only that, a bank can lend more than it has in the vaults, often 9 times more, and will also allow you to withdraw the money. This is called Fractional-reserve banking. If a money is loaned out, and everyone comes to the bank to get their deposits, there is not nearly enough money in the Bank. The scary part is that usually out of bank's paper assets less than 10% is actual physical money.
Inflation is also generated is by the Fed. Government officials need money for various programs - this is how they get elected. They also don't want to raise taxes to get more money - this is how they not get reelected. So the Government borrows money from The Federal Reserve, which gets created out of thin air and bears an interest. How does Government pay The Fed back? They just borrow more from them. Clearly, these policies cannot be sustained for too long - the time will come when the Government cannot borrow enough to pay interest, or when hyperinflation turns currency into a useless paper. This time may be NOW.
Parts of the article are Copyright FreeAmerica and Harry V. Martin, 1995