May 6, 2016 at 3:17 pm #183
Post your link on the Federal Reserve here. One link per post, please.
Congress passed The Federal Reserve Act (ch. 6, 38 Stat. 251, 12 U.S.C. ch. 3) on December 23, 1913. The Act created and established the Federal Reserve System (the Fed) which is the central banking system of the United States, and granted the Fed the authority to issue Federal Reserve Notes (now commonly known as the U.S. Dollar.)
It is no coincidence that the 16th Amendment was ratified just a few months prior, on February 3, 1913. The 16th Amendment changed a portion of Article I, Section 9. The amendment reads “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”
With these two changes, states were no longer in control of the money supply. Gold and silver took their first steps toward their end as the official money of the United States. The money supply was now in the hands of an elite few private bankers, since the Federal Reserve is not federal, but rather a quasi-governmental institution that enjoys the benefits of both private and public institutions while suffering few of the burdens of either type of entity. To this day, the Fed has not undergone a full, 3rd party audit, and attempts to pass audit legislation have been met with fierce opposition.
In July of 1944, representatives from all 44 allied nations met at the Mount Washington Hotel in Bretton Woods, New Hampshire. The Bretton Woods Conference, formally known as the United Nations Monetary and Financial Conference, was held to regulate international monetary and financial policies after the conclusion of World War II. The end result became known as the Bretton Woods agreement. In the agreement, the US was to keep the dollar’s value tied to gold, and the allied nations would tie the value of their currencies to the US dollar. At the time, the US had amassed 2/3rds of the world’s gold, and so was on a solid footing to stabilize other currencies.
The problem with the Bretton Woods Agreement is that every dollar printed by the Fed is introduced into the economy at interest. The US Treasury issues bonds that are purchased by the Fed with newly created dollars. When the bonds mature, the Treasury has to repay the lender (the Fed) with interest, but the interest is in US dollars. So, from the very beginning, the US monetary system was doomed to fail, because there will always be more dollars owed in interest than exists.
So naturally, as time passed, US debt began to grow since it can never be repaid. By the early 1930s, gold had become more valuable the the US dollar thanks to the inflationary policies of the Fed. To combat an exit from US dollars to gold, Franklin Roosevelt issue Executive Order 6102, signed on April 5, 1933, “forbidding the Hoarding of gold coin, gold bullion, and gold certificates within the continental United States”. The effect of the order, in conjunction with the statute under which it was issued, was to criminalize the possession of monetary gold by any individual, partnership, association or corporation. With control of the gold supply, the US government was now able to adjust the gold / dollar ratio to suit their needs. As an example, FDR once raised the price of gold by 21 cents. When Henry Morgenthau asked him why “21 cents” Roosevelt replied “it’s a lucky number, because its three times seven.”
Fast forward 3 decades to the mid 1960s. Gold had been under federal control since 1933, but many US coins were still minted with 90% silver, and the government was now seeing silver coin hording as the value of silver surpassed the dollar. The government’s answer was to remove the silver from the coins, but keep their face values. In 1982, the copper penny would face a similar devaluation, as 97.5% of their copper content was replaced with copper plated zinc.
1971 brought the final blow to the gold backed US dollar, as President Nixon was forced to abandon the Bretton Woods agreement after the US had lost a sizable amount of its gold reserves due to gold having more value than the US dollar, and the allied countries had started requesting gold instead of dollars. The decoupling of the dollar’s value from gold brought on some of the highest inflation rates in US history, prompting the Federal Reserve to raise interest rates to historical highs to combat the inflation. Since 1971, the US dollar has been a completely fiat currency, subject to the whims of government.
May 7, 2016 at 9:39 am #205
- This topic was modified 1 year, 3 months ago by Mark.
Blame the Federal Reserve, Not China, for Stock Market Crash (By Ron Paul)
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