U.S.
Government Corruption Starts with the Federal Reserve!
by Victor Sperandeo with the Curmudgeon
Disclaimer: The views and opinions expressed herein are
those of Victor Sperandeo.
Introduction:
Wherever you look within the US government you almost
always see corruption. The problem is amplified because virtually nothing is
reported in the mainstream media/ press about the reality of government and
business. The press, whose main job is to report the real news and monitor
corruption in government and business, is now itself part of the corruption!
The biggest and most prominent example is the Federal Reserve, which is
a "Private Corporation" owned by unknown/secret entities and
commercial banks.
Truth About the Fed:
We've covered the Fed extensively in several relevant
Curmudgeon posts. Is the Fed a No Risk
Hedge Fund or a Ponzi Scheme? criticized the
Fed's lack of transparency. Another Curmudgeon post suggested
that the Fed had engaged in surreptitious market manipulation which had been
ignored by the mainstream media.
Let's now examine Fed ownership via quotes from the Fed's
web site in an article titled: Who owns the Federal
Reserve?
“The Federal Reserve System fulfills its public mission
as an independent entity within government.
It is not "owned" by anyone and is not a private,
profit-making institution."
Yet that statement is then contradicted in the same
article (emphasis added)!!!
“The 12 regional Federal Reserve Banks, which were
established by the Congress as the operating arms of the nation's central
banking system, are organized similarly to private corporations (see below references)
-- possibly leading to some confusion about "ownership." For example,
the Reserve Banks issue shares of stock to member banks. However, owning
Reserve Bank stock is quite different from owning stock in a private company.
The Reserve Banks are not operated for profit, and ownership of a certain
amount of stock is, by law, a condition of membership in the System. The stock
may not be sold, traded, or pledged as security for a loan; dividends are,
by law, 6 percent per year.
Also from the Fed's website- several eye openers which reveal
the truth:
Directors
of Federal Reserve Banks and Branches:
Under the Federal Reserve Act,
each of the twelve Reserve Banks is separately incorporated with its own board
of directors. In each Reserve District, commercial
banks that are members of the Federal Reserve System own the stock of their
District's Reserve Bank and elect the majority of the Reserve Bank's
board of directors; the remainder of the directors are appointed by the Federal
Reserve Board.
Federal
Reserve Bank Presidents:
The Federal Reserve Act
provides that the president of a Federal Reserve Bank (each of the 12) shall be
the chief executive officer of the Bank, appointed by the board of directors
of the Bank, with the approval of the Board of Governors of the Federal
Reserve System, for a term of five years.
Hence, the Presidents of the 12 Federal Reserve banks
(which own the Fed) are appointed by their Board of Directors, which are
representatives of PRIVATE commercial banks in their respective district.
References:
1. Lewis vs.
United States, 680 F. 2d 1239 9th Circuit 1982
"The regional Federal Reserve banks are not
government agencies…but are independent, privately owned and locally
controlled corporations.”
2. Is
the Federal Reserve System a Governmental or a Privately controlled
organization?
“The only “ownership” of the Fed is in shares of each
of the 12 regional banks which are entirely owned by the private member
banks within their respective districts, according to a formula based on their
size (they must subscribe to the shares with 3% of their capital plus
surplus). The ownership is highly
restricted in that such ownership is mandatory; the shares can’t be sold; and they
pay a guaranteed 6% annual dividend.”
………………………………………………………………………………………...
Moreover, "The Federal Reserve Act of 1913" states:
“What eventually emerged was the Federal Reserve Act,
also known at the time as the Currency Bill, or the Owen-Glass Act. The bill
called for a system of eight to twelve mostly autonomous regional Reserve Banks
that would be owned by commercial banks…The Federal Reserve System would then
become-- a privately owned banking system that was operated in the public
interest.”
………………………………………………………………………………………...
The essence of this arrangement is that of an independent
banking cartel, licensed by an act of Congress, to print Federal Reserve Notes
(aka paper money or US dollars), control this nation's money supply, establish
member bank reserve requirements, create fiat money including checks written by
the Fed, and to set short term interest rates (e.g. Fed Funds and Discount
rates).
This SUPPOSEDLY is in the public interest, via an
implicit form of altruism and for a 6% dividend received by Reserve Bank
stockholders. The Federal Reserve Act was constructed in secret by bankers and
major Wall Street firms (representing the Rockefeller's, Morgan's, and
Rothschild's) through well-known representatives on Jekyll Island.
The above factual information is rarely written about by
the mainstream media and is generally hidden from the public. Why doesn't the
press state that the Fed is in reality a separate, private company and explain
how it's structured?
Recently, Congress voted down an audit of the Fed. Why?
It is completely secret and not at all transparent in what it does,
except for releasing the minutes of each FOMC meeting. This is the essence of
"Corruption," in my opinion.
As Henry
Ford observed at the time: "It is well enough that people of the
nation do not understand our banking and monetary system, for if they did, I
believe there would be a revolution before tomorrow morning."
Questions Never Asked:
1. Why does the
government not print the money itself, instead of paying a third party (the
Fed) to print money, and pay both a fee and interest to buy government debt? Some might say that would create inflation!
Using the official government CPI numbers from 1913 (when
the Fed was created) to February 2016, the compounded increase in the CPI
(indexed) went from 10 to 237.111 or a 3.15% compounded annual rate of
increase. This equals an increase in
inflation of 2,377.83%. Put another way,
$100.00 turned into 4.21 cents of purchasing power over those 103 years. Yet
from 1789 to 1913 (124 years before the Fed was created) inflation increased by
a total of only 15% under the Gold Standard.
We also got a STATED $19.2 trillion in government debt
and about $10 trillion in off balance sheet debt under the FED. The huge
increase in debt stems from the belief that it never matters since the Fed can
print money to buy it (that used to be called “monetizing the debt” which “bond
market vigilantes” wouldn't let happen).
The vigorish (an excessive rate
of interest on a loan, typically one from an illegal moneylender) goes to the
holders of the debt, which are mainly the banks and foreign governments.
2. Does the US
government have to use an (unconstitutional) Federal Reserve Act to accomplish
its goals?
In fact, the government is authorized to print money for
any reason according to the Supreme Court case "Juilliard v. Greenman," 110 U.S.
421(1884). That was a Supreme Court
of the United States case submitted January 22, 1884 and decided March 3, 1884,
in which issuance of greenbacks as legal tender was challenged in peacetime.
The Legal Tender Acts of 1862 and 1863 were upheld. In an 8–1 decision, resting
largely on prior court cases, the power "of making the notes of the United
States a legal tender in payment of private debts" was interpreted as
"included in the power to borrow money and to provide a national
currency."
Note: It's also
unconstitutional as Article 1 section 8 allows the government to borrow and to
mint gold and silver coins, but "not emit bills of credit" aka
Federal Reserve Notes. There's no
mention of a “US national currency.”
The one dissent in the above case is worth noting. Justice Field dissented, challenging the
court's interpretation of the terms to "borrow" and "coin"
money. Field asserted that the meaning
of the terms ‘to coin money’ was not at all doubtful: “It is to mold metallic
substances into forms convenient for circulation and to stamp them with the
impress of the government.” Field argued that in the clause authorizing
congress “to provide for the punishment of counterfeiting the securities and
current coin of the United States,” a distinction was clearly made between debt
and coin. Justice Field also cited many quotes by the US founders against paper
money, including the following by James Madison:
"The pretext for paper currency, and particularly
for making the bills a tender either for public or private debts, was cut
off."
Lastly Field's foretelling brilliance -
From the decision of the court
I see only evil likely to follow. There have been times within the memory of
all of us when the legal-tender notes of the United States were not
exchangeable for more than one-half of their nominal value. The possibility of
such depreciation will always attend paper money. This inborn infirmity no mere
legislative declaration can cure. If Congress has the power to make the notes a
legal tender and to pass as money or its equivalent, why should not a
sufficient amount be issued to pay the bonds of the United States as they
mature? Why pay interest on the millions
of dollars of bonds now due when Congress can in one day make the money to pay
the principal? (That is my question.)
And why should there be any
restraint upon unlimited appropriations by the government for all imaginary
schemes of public improvement, if the printing-press can furnish the money that
is needed for them?
………………………………………………………………………………………...
So why are bankers getting this great deal? Because Congress can't issue to itself
campaign contributions! But banks can
make all kinds of wealth making deals for so called "public servants.”
For example, Mitch McConnell's net worth is listed at $9.2
to $36 million dollars (the 10th richest, while his counterpart Harry Reid is worth
$10 million. In fact, 50.8% of Congress and 67% of the Senate (“public
servants”) are millionaires (as of 1/15/15).
“The Federal Reserve banks are one of the most corrupt
institutions the world has ever seen. There is not a man within the sound of my
voice who does not know that this nation is run by the International
bankers.” -- Congressman Louis T.
McFadden
WSJ Editorial Explains US Political Mentality:
A March 14th WSJ editorial by Joseph Epstein
titled “The Political Stupidity of the Jews Revisited" cites
examples of government policy against Jews in two presidential administrations.
Epstein wrote:
The story has it that during
the George H.W. Bush administration, James Baker proposes to his boss an idea
that would go against Israeli interests. “The Jews aren’t going to like it,”
President Bush says. Mr. Baker replies: “They don’t vote for us anyway—screw ’em!” Fast forward 15 years, when Rahm Emanuel proposes a
different idea to his boss that would also go against Israeli interests. “The
Jews aren’t going to like it,” President Obama says. Mr. Emanuel replies: “They
vote for us anyway—screw ’em!”
Through federal regulation and
high taxation, the Democratic Party has done what it could to strangle the
entrepreneurial spirit that was once the pride of the Jewish middle class. Only
a schmuck works for someone else is, in some quarters, the 11th Jewish commandment.
For the current political season, I propose a 12th: Vote your mind, not your
ethnicity.
Conclusions and Historical Quotes:
The US government in all its activities, has become
corrupt in so many ways, one can write a two volume book on it. For this short
blog post I chose the Fed as an example, because it has the largest influence
on all of us living today and in the future.
To understand why the US government is permeated by
corruption it is best to view the people who are enticed by power over their
fellow citizens. Leo Tolstoy offered us
the following insight into such "public servants:"
Charles-Louis de Secondat,
Baron de La Brède et de Montesquieu, who was famous
for his articulation of the theory of separation of powers, which is
implemented in many worldwide constitutions (especially the US) wrote:
"EXPERIENCE CONSTANTLY PROVES THAT EVERY MAN WHO HAS
POWER IS IMPELLED TO ABUSE IT."
Please remember those words, especially when you read
“news” or “comment and analysis” from the mainstream media.
Good luck and till next time...
The
Curmudgeon
ajwdct@sbumail.com
Follow the
Curmudgeon on Twitter @ajwdct247
Curmudgeon is a retired investment professional. He has
been involved in financial markets since 1968 (yes, he cut his teeth on the 1968-1974
bear market), became an SEC Registered Investment Advisor in 1995, and received
the Chartered Financial Analyst designation from AIMR (now CFA Institute) in
1996. He managed hedged equity and alternative (non-correlated)
investment accounts for clients from 1992-2005.
Victor Sperandeo is a
historian, economist and financial innovator who has re-invented himself and
the companies he's owned (since 1971) to profit in the ever changing and arcane
world of markets, economies and government policies. Victor started his Wall Street career in 1966
and began trading for a living in 1968. As President and CEO of Alpha Financial
Technologies LLC, Sperandeo oversees the firm's research and development
platform, which is used to create innovative solutions for different futures
markets, risk parameters and other factors.
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