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Federal Reserve is at Root of Problem

by Charley Reese, King Features Syndicate

In the late 1960's, you could buy four or five heavy bags of groceries at a supermarket for about $17. Today, you can carry $17 worth of groceries in a plastic sack hooked around your little finger.

Ever wondered why the change?

It's simple. Our currency has been devalued. When a nation's currency is devalued, businesses and professions can raise prices and fees to compensate for the loss of value. It's the working men and women who get the shaft. Unlike businesses and professionals, the working folks don't control their own income.

Sure, income has risen somewhat to compensate for the loss of value, but it is the paycheck that always lags behind devaluation, not prices and fees.

America's money and credit system is deliberately confusing. The people who designed it were logically afraid that if people understood it, they would never put up with it.

Let's start with the money in your pocket. You will notice that it is a Federal Reserve Note. It is redeemable in nothing. It is backed up by nothing. Its exchange value, or purchasing power, is determined by the volume in circulation in comparison with the goods and services available at any given time. What makes this scam possible are those 11 little words tucked away in small type: "This note is legal tender for all debts, public and private."

Without a legal-tender law, people could defend themselves against devaluation by simply switching to gold or silver or even to a more stable foreign currency, such as the Swiss Franc. In the early days of the republic, there were many different kinds of money in use. You can't afford to do that now because anybody who owes you money can pay you in Federal Reserve Notes, and by law, you have to accept them.

The next step in figuring all this out is to realize that the Federal Reserve System is a privately owned central bank. It deliberately was made confusing. There are 12 regional Federal Reserve Banks, each one private and owned by commercial banks. As in George Orwell's "Animal Farm," all the Federal Reserve Banks are equal, but the New York Federal Reserve Bank is more equal than the others. It handles the government bonds, and its president has a permanent seat on the Federal Open Market Committee. This board, whose members are appointed by the president, is a quasi-governmental organization. More quasi than governmental, I assure you.

So, here is how your money is devalued. When Congress wants to spend $50 billion more than it collects in taxes, it goes to the Federal Reserve. The government gives the Federal Reserve $50 billion in government bonds, and the Federal Reserve adds $50 billion to the government's checking account.

Sounds reasonable. But there is a catch. Where does the Federal Reserve get the $50 billion to put in the government's checking account? It creates it out of nothing with a keystroke. The bonds and the interest due on them are paid for with taxes, which is to say the sweat and labor of the American people.

In the meantime, to stay with our example, $50 billion in new money has been put into the system. In addition to that, the Federal Reserve can manipulate the economy. To put more money into the system, always in the form of debt at interest, it lowers interest rates; to take money out of the system, it raises interest rates.

Just as the avaiator Charles Lindbergh's father said in Congress in 1913, passage of the Federal Reserve Act meant that, from then on, inflation and deflation would be scientifically created by a central bank to suit its own, and its owners' (other banks, remember), interests.

Now, what do banks fear most? Depression? No. They don't lend money without collateral. A depression just means they collect real wealth in the form of foreclosures. No, what bankers fear most is runaway inflation. If they lend you a thousand bucks, they don't want to get paid back with a thousand bucks that is only worth a nickel.

And you can see the truth of what I'm saying. Regardless of what presidents wanted, the Federal Reserve has never hesitated to cause a recession if it appeared inflation (devaluation) was going to speed up. As long as the devaluation is gradual, banks can compensate with higher interest rates. It's rapid, runaway inflation that they fear. The Federal Reserve has never hesitated to wreck the economy and dreams and hopes of the American people to protect the interests of the bankers.

Now, today, we have journalists so ignorant of such matters, they have made Alan Greenspan, chairman of the Federal Reserve Board, a celebrity and a hero when he's never looked out for anyone's interests other than those of the bankers.

Ah, well, as another American hero has said, "Stupid is as stupid does."

- Charley Reese is a syndicated columnist. He writes for King Feature Syndicate.

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