Why It's Time to Audit the Fed 23 comments
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Friday 25 September 2009 had two significant events. First, there was a full committee hearing on Ron Paul’s bill H.R. 1207 to audit the Federal Reserve. Second, Chief Judge Edith Jones of the United States Court of Appeals for the Fifth Circuit, directly under the United States Supreme Court and covers Florida, Georgia, Alabama, Mississippi, Lousiana and Texas, issued an order for a three judge panel (.pdf) to hear an issue brought about apportionment regarding the House of Representatives. Both of these actions, should they be brought to fruition, would seek to restore essential checks and balances found in the United States Constitution and reduce the centralization of power.
END THE FED
Murray Rothbard argues in The Case Against The Fed that because depositors are entitled to demand their deposits at any time and because by its nature fractional reserve banking cannot sustain all depositors demanding their deposits at the same time therefore fractional reserve banking is fraud.
Because of the inherently fraudulent nature of fractional reserve banking bank runs were a common occurrence before the FDIC and Federal Reserve system. However, because of the cartel nature of the FDIC and Federal Reserve system individual bank failures are no longer to be feared by depositors because of the implicit guarantees.
These implicit guarantees have been turned into actual guarantees with the $100k limit being increased to $250k, which returns to $100k on 1 January 2010, the FDIC’s reserve fund being depleted and the Treasury extending a $500B line of credit to help placate owner’s of $13T+ of FDIC insured funds.
This has introduced tremendous moral hazard. Moral hazard is the economic principle that a party insulated from risk may behave differently from the way it would behave if it were fully exposed to the risk. As a result, people do more due diligence on the movies they watch than the banks they deposit their currency in.
For example, with FDIC insurance the moral hazard occurs often without conscious or malicious action. Depositors have been trained to seek out the highest yields without regard to the underlying stability of the bank because when there is a bank failure the losses are socialized through increased FDIC insurance premiums, inflated away by the Federal Reserve through increasing the currency supply or a myriad of other fraudulent, deceitful, immoral or often illegal means. The lynchpin of the current banking system, which is inherently unstable and will fail, is the Federal Reserve.
Consequently, the Federal Reserve is built on a fraud and the attendant effect on the rest of the economy is to distort normal market operations through both the supply and cost of currency. This is illegally and unconstitutionally perpetuated through legal tender laws which violate the Constitution in regards to the monetary provisions in Article 1 Sections 8 and 10, the 10th Amendment and confounded the definition of a dollar and serve to centralize power.
But this immoral system, conceived in iniquity under cloak and dagger as explained by G. Edward Griffin in The Creature From Jekyll Island, has been perpetuated for nearly 100 years and despite humanity doing just fine for thousands of years many cannot conceive of an economy should the Federal Reserve be razed.
Nevertheless, because the system is built on fraud and because sunshine is the best disinfectant therefore the Federal Reserve has strongly challenged any type of public audit, accountability or oversight despite it being in the best interest of American citizens.
AUDIT THE FED
As the wretched vampire squid is dragged into the sunlight and revealed for the parasite it is then increased political pressure will be brought to bear on the immoral institution. Ron Paul’s bill, which received a full committee hearing, is the first major step in this direction in a long time.
During the hearing testimony was heard from both Austrian economist Tom Woods (.pdf), author of Meltdown, and Scott Alvarez (.pdf) the general counsel for the Federal Reserve. As the general public becomes aware of the tremendous damage this institution and those on Wall Street have done hopefully they will adopt the spirit of the Founding Fathers.
Mr. Alvarez, or should we say Chicken Little, decides to terrorize those who advocate in favor of H.R. 1207. He testified:
These concerns likely would increase inflation fears and market interest rates and, ultimately, damage economic stability and job creation. … Higher long-term interest rates would further increase the burden of the national debt on current and future generations. Adoption of H.R. 1207 also could disrupt the nation’s relationships with foreign central banks and governments, relationships which are helpful in supporting the Federal Reserve’s efforts to fulfill its statutory missions, and erect barriers to official cooperation among central banks and governments. Foreign central banks and governments likely would be less willing to engage in financial transactions with the Federal Reserve if these transactions were subject to policy review by the GAO as H.R. 1207 would allow. These transactions, such as the deposit of international reserves and bilateral currency swap arrangements, help support the role of the dollar as the worldwide reserve currency.
For example, first comes the audit of the Federal Reserve system. Next comes the legislation to end it. Then comes a reenactment of legislation like the Coinage Act of 1792 to prevent future similar behavior which reads:
SECTION 19. And be it further enacted, That if any of the gold or silver coins which shall be struck or coined at the said mint shall be debased or made worse as to the proportion of fine gold or fine silver therein contained, or shall be of less weight or value than the same ought to be pursuant to the directions of this act, through the default or with the connivance of any of the officers or persons who shall be employed at the said mint, for the purpose of profit or gain, or otherwise with a fraudulent intent, * * * every such officer or person who shall be guilty of any * * * of the said offenses, shall be deemed guilty of felony, and shall suffer death.
APPORTIONMENT
Bicameralism is the practice of having two legislative or parliamentary chambers. The United States Congress is modeled after the British system which was composed of the House of Lords and the House of Commons. The United States Senate is composed of 2 Senators from each state while the House of Representatives is under Article I Section 2 to be “chosen every second Year by the People of the several States”. Under the doctrine of apportionment the House is to grow as the population grows and it did for the first 130 years of the Republic except in 1840. But the Reapportionment Act of 1929 limited the size of the House to 435.
Currently, Congress Critters have a constituency of about 700,000 instead of about 50,000 like they did before the Reapportionment Act. This has served to consolidate power and make the Congress Critters less responsive to The People. The 17th Amendment was ratified in 1913, the same year the Federal Reserve Act was passed, and provided for the direct election of Senators. The eviseration of these two checks and balances in the American political machinery has made it easier for special interests and lobbyists to influence elected officials.
With the House often gridlocked with 435 members imagine the chaos of getting everyone aligned if there were over 1,300? Ironically, increasing the number of Congress Critters through proper apportionment would likely have the effect of greatly decreasing the size of government because special interests would have much less influence and control with politicians likely much more accountable to their constituency. Therefore, I find this order by Judge Jones for a hearing on the apportionment issue to be extremely interesting and a positive development regarding the decentralization of power.
CONCLUSION
The auditing of the Federal Reserve system would be very beneficial for the powers of truth and justice. The Federal Reserve system should be viewed as counterfeiters because they enjoy a legalized counterfeiting franchise and are able to engage in creating new fiat currency with legal tender status and doing so amounts to confiscation through inflation which is a form of taxation without representation or due process of law. Unmasking these costumed terrorist counterfeiters will bring to light and the conscience of The People the degree to which they are being stolen from.
Likewise apportionment could result in Congress Critters being more responsive to their constituency who could demand the repeal of the Federal Reserve Act and the implementation of legislation like Section 19 of the Coinage Act of 1792. Humanity has survived and thrived for thousands of years without a Federal Reserve. Consequently, auditing and abolishing the Federal Reserve will be a great development for humanity and reduction in the centralization of power.
Disclosure: Long physical gold, silver and platinum and no position the problematic GLD or SLV ETFs.
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Having spent so many taxpayer dollars, directly and indirectly through guarantees, the Fed has a duty and obligation to reveal how these monies were spent; taxpayers have a right to know the disposition of these monies. This right trumps any special privilege the Fed may wish to invoke.
The privacy and secrecy the Fed wishes to enjoy must be earned; it's failed miserably. Additionally, the taxpayers have a right to know how their monies are being spent and this transparency will benefit the entire economy and make the Fed more accountable.
“We have come to be one of the worst ruled, one of the most completely controlled governments in the civilized world – no longer a government of free opinion, no longer a government by a vole of the majority, but a government by the opinion and duress of a small group of dominant men.
“Some of the biggest men in the United States, in the field of commerce and manufacture, are afraid of something. They know that there is a power so organized, so subtle, so watchful, so interlocked, so complete, so pervasive, that they had better not speak above their breath when they speak in condemnation of it”
- Woodrow Wilson
“These international bankers and Rockefeller-Standard Oil interests control the majority of newspaper and the columns of these papers to club into submission or drive out of public office officials who refuse to do the bidding of the powerful corrupt cliques which compose the invisible government.”
-Theodore Roosevelt
“I have two great enemies, the Southern Army front of me and the financial institution in the rear. Of the two, the one in my rear is my greatest foe.”
-Abraham Lincoln
“Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves.”
– Andrew Jackson
“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”
- Thomas Jefferson
On Sep 27 12:19 PM CautiousInvestor wrote:
> For those interested, here are some insights offered by historical
> figures on central banks and the power they are cpable of exercising.
> While casually bearing upon the audit matter, the insights are being
> offered out of matters of general interests than any argument to
> audit the Fed. Courtesy Pragmatic Capitalist:
>
>
> “We have come to be one of the worst ruled, one of the most completely
> controlled governments in the civilized world – no longer a government
> of free opinion, no longer a government by a vole of the majority,
> but a government by the opinion and duress of a small group of dominant
> men.
> “Some of the biggest men in the United States, in the field of commerce
> and manufacture, are afraid of something. They know that there is
> a power so organized, so subtle, so watchful, so interlocked, so
> complete, so pervasive, that they had better not speak above their
> breath when they speak in condemnation of it”
> - Woodrow Wilson
>
> “These international bankers and Rockefeller-Standard Oil interests
> control the majority of newspaper and the columns of these papers
> to club into submission or drive out of public office officials who
> refuse to do the bidding of the powerful corrupt cliques which compose
> the invisible government.”
> -Theodore Roosevelt
>
> “I have two great enemies, the Southern Army front of me and the
> financial institution in the rear. Of the two, the one in my rear
> is my greatest foe.”
> -Abraham Lincoln
>
> “Gentlemen, I have had men watching you for a long time and I am
> convinced that you have used the funds of the bank to speculate in
> the breadstuffs of the country. When you won, you divided the profits
> amongst you, and when you lost, you charged it to the bank. You tell
> me that if I take the deposits from the bank and annul its charter,
> I shall ruin ten thousand families. That may be true, gentlemen,
> but that is your sin! Should I let you go on, you will ruin fifty
> thousand families, and that would be my sin! You are a den of vipers
> and thieves.”
> – Andrew Jackson
>
> “I believe that banking institutions are more dangerous to our liberties
> than standing armies. If the American people ever allow private banks
> to control the issue of their currency, first by inflation, then
> by deflation, the banks and corporations that will grow up around
> [the banks] will deprive the people of all property until their children
> wake-up homeless on the continent their fathers conquered. The issuing
> power should be taken from the banks and restored to the people,
> to whom it properly belongs.”
> - Thomas Jefferson
On Sep 27 12:19 PM CautiousInvestor wrote:
> For those interested, here are some insights offered by historical
> figures on central banks and the power they are cpable of exercising.
> While casually bearing upon the audit matter, the insights are being
> offered out of matters of general interests than any argument to
> audit the Fed. Courtesy Pragmatic Capitalist:
>
>
> “We have come to be one of the worst ruled, one of the most completely
> controlled governments in the civilized world – no longer a government
> of free opinion, no longer a government by a vole of the majority,
> but a government by the opinion and duress of a small group of dominant
> men.
> “Some of the biggest men in the United States, in the field of commerce
> and manufacture, are afraid of something. They know that there is
> a power so organized, so subtle, so watchful, so interlocked, so
> complete, so pervasive, that they had better not speak above their
> breath when they speak in condemnation of it”
> - Woodrow Wilson
>
> “These international bankers and Rockefeller-Standard Oil interests
> control the majority of newspaper and the columns of these papers
> to club into submission or drive out of public office officials who
> refuse to do the bidding of the powerful corrupt cliques which compose
> the invisible government.”
> -Theodore Roosevelt
>
> “I have two great enemies, the Southern Army front of me and the
> financial institution in the rear. Of the two, the one in my rear
> is my greatest foe.”
> -Abraham Lincoln
>
> “Gentlemen, I have had men watching you for a long time and I am
> convinced that you have used the funds of the bank to speculate in
> the breadstuffs of the country. When you won, you divided the profits
> amongst you, and when you lost, you charged it to the bank. You tell
> me that if I take the deposits from the bank and annul its charter,
> I shall ruin ten thousand families. That may be true, gentlemen,
> but that is your sin! Should I let you go on, you will ruin fifty
> thousand families, and that would be my sin! You are a den of vipers
> and thieves.”
> – Andrew Jackson
>
> “I believe that banking institutions are more dangerous to our liberties
> than standing armies. If the American people ever allow private banks
> to control the issue of their currency, first by inflation, then
> by deflation, the banks and corporations that will grow up around
> [the banks] will deprive the people of all property until their children
> wake-up homeless on the continent their fathers conquered. The issuing
> power should be taken from the banks and restored to the people,
> to whom it properly belongs.”
> - Thomas Jefferson
D.C. We need massive pest control for all the elite leeches lurking.
Please buy all the PHYSICAL gold and silver you can NOW!
I'm more worried about apportionment. Sure more Congressmen might make them more accountable. There would also be way more of them voting for automatic pay raises every year and earmarking money for their 20 acre districts.
My city councilman only has a few thousand people to represent and he's a big crook. Same for most of the state legislators, and theirs isn't even supposed to be a full time job..
Speaking of state legislators, before the 14th Amendment, they used to elect the Federal Senators. Personally, I'd rather do it myself. Imagine the mess in California if that state legislature tried to select senators.
A little history:
1807 - depression
1839 - depression. The longest & deepest in U.S. history.
1873 - panic & depression. The worst recorded by NBER.
Then there were 14 more recessions and panics before the Great Depression occuring with an average frequency of every 4 years.
The obvious conclusion is that human behaviour in combination with the simplest forms of free market capitalism is highly pro-cyclical and unstable. Right now, the Fed is the only significant counter-cyclical force in our economy. Now I'm sure that there are other hypothetical counter-cyclical systems that are superior to the current one. But this one, with all its warts, is a lot better than the previous era.
Besides, are you really proposing junking the Fed and turning the whole economy over to the tender mercies of Pelosi, Reid, Frank, Dodd, & Obama?
On Sep 27 01:27 PM yellowhoard wrote:
> It takes a lot of chutzpah for Woodrow Wilson to lament the power
> of financial institutions.
Individual risk has been replaced with socialized risk- Social Security, Medicare, Pension Bailouts, FDIC. "Too-big-to-fail" status and the Greenspan Put first created a moral hazard epidemic; next, they will lead to Corporatism as the Government exerts both excessive regulation and outright ownership.
The Fed was the bastard offspring of an unholy union of Bankster Oligarchs and Progressive Elites. Daddy wanted the power of monetary control, Mommy wanted the promise of State security.
On Sep 27 10:25 PM THofler wrote:
> I'm sympathetic to most of these views. But Milton Friedman recognized
> that history is the economist's laboratory.
>
> A little history:
> 1807 - depression
> 1839 - depression. The longest & deepest in U.S. history.<br/>1873
> - panic & depression. The worst recorded by NBER.
>
> Then there were 14 more recessions and panics before the Great Depression
> occuring with an average frequency of every 4 years.
>
> The obvious conclusion is that human behaviour in combination with
> the simplest forms of free market capitalism is highly pro-cyclical
> and unstable. Right now, the Fed is the only significant counter-cyclical
> force in our economy. Now I'm sure that there are other hypothetical
> counter-cyclical systems that are superior to the current one. But
> this one, with all its warts, is a lot better than the previous era.
>
>
> Besides, are you really proposing junking the Fed and turning the
> whole economy over to the tender mercies of Pelosi, Reid, Frank,
> Dodd, & Obama?
To me the Keynesian school of economics and the people who believe in printing money out of thin air are a bunch of snake oil salesman, and even if Keynesian economics is right, it would only be good if the government spent the money on stuff that is useful. Instead the money is squandered on the welfare state, the military industrial complex, and the prison industrial complex. Our freedoms and liberties are trampled, but hopefully this 1984 style system comes crashing down.
Audit is a power grab by congress who want to tell the Fed how much money to print and that is truly dangerous.