REPETITION OF USURPED GOVERNMENT POWERS RENDERED UNCONSTITUTIONAL.
Unconstitutional usurpations by one branch of government of powers entrusted to a coequal branch are not rendered constitutional by repetition.
The United States Supreme Court held unconstitutional hundreds of laws enacted by Congress over the course of five decades that included a legislative veto of executive actions in INS v. Chada, 462 U.S. 919 (1982).
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The right to print money in any amount, control its supply and price, and benefit hugely by loaning it out for a profit including to the government itself that must pay interest on the money it should never have to if it simply printed its own.
Think of what happened as the government having legalized the right to counterfeit the national currency for private gain.
It’s no exaggeration to claim this is the greatest ever of all financial scams causing incomprehensible harm with the public none the wiser.
The Fed was given the authority to conduct the nation’s monetary policy with the power to control the supply and price of money.
It has three ways to do it – through open market operations, the discount rate it charges member banks, and the reserve requirement percentage of member banks assets it requires them to hold and not loan out.
The Board of Governors is responsible for handling the discount rate and reserve requirements while the Federal Open Market Committee (FOMC) is in charge of the open market operations of buying or selling bonds explained further below.
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Using these tools, the Fed is able to influence the supply and demand for money and thus directly control the federal funds short-term rate that’s always fixed unless the Fed wishes to raise or lower it. Longer rates are controlled by the powerful institutional traders in the bond market.
The Federal Open Market Committee is the key to the whole process of money creation or contraction. It consists of 12 members – seven members of the Board of Fed Governors, the president of the New York Fed Bank (the most important one of all) and four of the remaining 11 Reserve Bank presidents who serve one year terms on a rotating basis.
The FOMC literally has the power to create money out of nothing. It does it in a four step process:
Step 1 – The FOMC first approves the purchase of US government bonds on the open market.
Step 2 – The New York Fed bank buys them from sellers (financial markets always have an equal number of buyers and sellers).
Step 3 – The Fed pays for its purchases with electronic credits to the sellers’ banks, which, in turn, credit the sellers’ bank accounts. These credits are literally created out of nothing.
Step 4 – The banks receiving the credits can then use them as reserves to enable them to loan out as much as 10 times their amount (if their reserve requirement is 10%) through the magic (only banks have) of fractional reserve banking and, of course, collect interest on all of it. What a business, and it’s all legal.
Imagine how rich we might all be if we as private individuals could do the same thing. Borrow a million from the Fed and like magic it becomes 10 times as much and we get to collect interest on all but the 10% of it we must hold in reserve.
This is the magic of fractional reserve banking money creation [aka; DERIVATIVES] and explains how powerful an economic stimulus it is when the Fed wants to enhance economic growth.
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The Federal Reserve System exists only to serve its owners and member banks and in doing so is hostile to the public interest.
That’s because it’s a banking cartel with the power to restrict competition for greater profits gained at our expense.
It goes from our pockets to theirs, and the public loses in at least four ways:
Through the invisible tax of inflation that results from the dilution of purchasing power caused by newly created money entering the system reducing the value of dollars already there.
The Greenspan Fed was especially expansive, never was held to account for its excess and was able to pass a serious problem it created on to a future Fed chairman and society to deal with.
The man we now lionize as a monetary magician began sensibly. From 1982, before he arrived in 1987, until 1992, the money supply increased on average by 8% a year. But from 1992 – 2002, the printing press worked overtime in sync with the deregulation and growth of global markets expanding the currency by more than 12% a year.
It became even more extreme post 9/11 and since 2002 grew at a 15% rate. It now has more than doubled in less than a decade.
It appears that the new Fed chairman has taken note and has begun reducing the rate of money expansion as he continues raising the federal funds rate to whatever level he has in mind.
Currency traders as well apparently have taken note of the rate of money supply expansion overall.
Except for a respite in 2005, it’s quite likely the dollar weakness since 2002 is the result of the excess amount of them created for the Bush administration’s profligate spending to fund its endless wars and reckless tax cuts for the rich.
The problem is further compounded as from 1964 to the present debt service has grown from 9% to 16.5% of the federal budget and rising; the current account deficit has gone from a 1% surplus to an almost 7% deficit; and federal indebtedness has grown by 40% just since 2001 and financed in large part by “the kindness of (foreign) strangers” that may be growing restive.
Furthermore, since March, 2006, the Fed stopped publishing the M-3 aggregate of the total amount of dollars in circulation.
With that transparency gone, big buyers of US Treasuries now have to calculate the value of the dollar based on speculation and uncertainty rather than hard data – not a way to inspire trust in the financial markets that function best in an atmosphere of openness and clarity.
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The public also loses because the banking cartel is able to practice usury – from its power over a flexible currency to artificially move rates up or down to any level it chooses which many small lenders in a truly free and open market can’t do.
In addition, the cartel’s market dominance forces most borrowers (especially smaller ones less able to issue their own debt instruments) to come to them for loans which it’s then able to make using what should be the peoples’ money available to them at the lowest possible cost from many highly government regulated small lenders competing for customers.
Through the taxes, we, the public, must pay to cover the interest on the huge national debt (now over $8.4 trillion) accumulated from the money the Fed printed and loaned to the government.
Meaning that the United States Budget Deficit is no more than a tab we owe to the FED and to cover the bonds issued for using the Federal Reserve notes. Now the deficit totals an annualized amount exceeding two-thirds of a trillion dollars and increasing daily. It’s made the banker’s rich, ordinary people poorer and the public none the wiser it’s been fleeced big time.
Compounding the above abuse, the cartel is able to get the public to bail out the system with more of its tax dollars. It happens whenever any of the too-big-to-fail banks need financial help to survive.
The same is true for big corporations like Chrysler or Lockheed, large investment firms or hedge funds like Long-Term Capital Management or even countries like Mexico.
It’s also true when a single bank goes out of business and depositors must be compensated or more seriously in the wake of a systemic financial meltdown like the one that wiped out many savings and loan banks in the 1980s.
Whether it’s a single bank or many dozens at a time, public tax dollars are used to save the system or just pick up the tab to repay depositors insured against losses through government insurance protection up to a stipulated amount per account
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The Fed harms the public welfare in one other important way, and again most people are none the wiser about it.
Supposedly the Federal Reserve System was established to stabilize the economy, smooth out the business cycle, maintain a healthy rate of sustainable growth while holding prices steady and benefiting everyone. So how well has it done its job?
Since its creation in 1913, and with them in charge, we had the crashes of 1921 and the most important and remembered one in 1929.
That was followed by The Great Depression that lasted until the onset of World War II that noted conservative economist Milton Friedman explained was caused and exacerbated because the Federal Reserve oddly decided to reduce the money supply at a time of economic contraction instead of increasing it.
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We then had recessions in 1953, 1957, 1969, 1975, 1981, 1990 and 2001.
We also had inflation beginning in the 1960s which became quite severe through much of the 1970s and early 1980s. And we had a major banking crisis in the 1980s at which time more banks and savings and loan associations failed than ever before in our history.
It happened in the wake of financial market deregulation when banks were allowed to pursue their own interests without government oversight to check their willingness to assume excess risk or stop them from trying to get away with deliberate fraud.
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Along with the economic stability the Fed never achieved, we’ve also had soaring consumer debt; record high federal budget and trade deficits; a high level of personal bankruptcies and rising mortgage loan delinquencies; interest on a mounting national debt that’s a large and rising percentage of the federal budget; the loss of our manufacturing base and it’s high-paying jobs with good benefits because they’re being exported to low wage countries; an economy in which services now account for nearly 80% of all business that provide mostly lower paying, less skilled jobs with few or no benefits; and a widening income and wealth gap that continues to harm lower and middle income earners to benefit the rich and well-off privileged few and a government that encourages it.
This information can be overwhelming but it was designed that way to keep the public in the dark.
The bottom line is that the Federal Reserve is an illegal banking entity that harms us all.
This paper was meant to be in respect to a Microeconomics subject but how can one worry about the price-cost relationship of a single firm when the entire system is corrupted.
This whole problem could be regulated and changed if only Congress took back the responsibilities that are intrinsically theirs to coin and regulate currency.
“The death of Lincoln was a disaster for Christendom. There was no man in the United States great enough to wear his boots and the bankers went anew to grab the riches.
I fear that foreign bankers with their craftiness and tortuous tricks will entirely control the exuberant riches of America and use it to systematically corrupt civilization.”
Otto von Bismark (1815-1898), German Chancellor, after the Lincoln assassination.
This has been tried by three previous Presidents and the result was either assassinations or mysterious deaths of those Presidents.
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