Is The Federal Reserve Bank?
What is the Federal Reserve Bank (FED) and why do we
Greg Hobbs November 1, 1999
The FED is a central bank. Central banks are supposed to implement a
country's fiscal policies. They monitor commercial banks to ensure that
they maintain sufficient assets, like cash, so as to remain solvent
and stable. Central banks also do business, such as currency exchanges
and gold transactions, with other central banks. In theory, a central
bank should be good for a country, and they might be if it wasn't for
the fact that they are not owned or controlled by the government of
the country they are serving. Private central banks, including our FED,
operate not in the interest of the public good but for profit.
There have been three central banks in our nation's history. The first
two, while deceptive and fraudulent, pale in comparison to the scope
and size of the fraud being perpetrated by our current FED. What they
all have in common is an insidious practice known as "fractional
Fractional banking or fractional lending is the ability to create money
from nothing, lend it to the government or someone else and charge interest
to boot. The practice evolved before banks existed. Goldsmiths rented
out space in their vaults to individuals and merchants for storage of
their gold or silver. The goldsmiths gave these "depositors"
a certificate that showed the amount of gold stored. These certificates
were then used to conduct business.
In time the goldsmiths noticed that the gold in their vaults was rarely
withdrawn. Small amounts would move in and out but the large majority
never moved. Sensing a profit opportunity, the goldsmiths issued double
receipts for the gold, in effect creating money (certificates) from
nothing and then lending those certificates (creating debt) to depositors
and charging them interest as well.
Since the certificates represented more gold than actually existed,
the certificates were "fractionally" backed by gold. Eventually
some of these vault operations were transformed into banks and the practice
of fractional banking continued.
Keep that fractional banking concept in mind as we examine our first
central bank, the First Bank of the United States (BUS). It was created,
after bitter dissent in the Congress, in 1791 and chartered for 20 years.
A scam not unlike the current FED, the BUS used its control of the currency
to defraud the public and establish a legal form of usury.
This bank practiced fractional lending at a 10:1 rate, ten dollars of
loans for each dollar they had on deposit. This misuse and abuse of
their public charter continued for the entire 20 years of their existence.
Public outrage over these abuses was such that the charter was not renewed
and the bank ceased to exist in 1811.
The war of 1812 left the country in economic chaos, seen by bankers
as another opportunity for easy profits. They influenced Congress to
charter the second central bank, the Second Bank of the United States
(SBUS), in 1816.
The SBUS was more expansive than the BUS. The SBUS sold franchises and
literally doubled the number of banks in a short period of time. The
country began to boom and move westward, which required money. Using
fractional lending at the 10:1 rate, the central bank and their franchisees
created the debt/money for the expansion.
Things boomed for a while, then the banks decided to shut off the debt/money,
citing the need to control inflation. This action on the part of the
SBUS caused bankruptcies and foreclosures. The banks then took control
of the assets that were used as security against the loans.
Closely examine how the SBUS engineered this cycle of prosperity and
depression. The central bank caused inflation by creating debt/money
for loans and credit and making these funds readily available. The economy
boomed. Then they used the inflation which they created as an excuse
to shut off the loans/credit/money.
The resulting shortage of cash caused the economy to falter or slow
dramatically and large numbers of business and personal bankruptcies
resulted. The central bank then seized the assets used as security for
the loans. The wealth created by the borrowers during the boom was then
transferred to the central bank during the bust. And you always wondered
how the big guys ended up with all the marbles.
Now, who do you think is responsible for all of the ups and downs in
our economy over the last 85 years? Think about the depression of the
late '20s and all through the '30s. The FED could have pumped lots of
debt/money into the market to stimulate the economy and get the country
back on track, but did they? No; in fact, they restricted the money
supply quite severely. We all know the results that occurred from that
action, don't we?
Why would the FED do this? During that period asset values and stocks
were at rock bottom prices. Who do you think was buying everything at
10 cents on the dollar? I believe that it is referred to as consolidating
the wealth. How many times have they already done this in the last 85
Do you think they will do it again?
Just as an aside at this point, look at today's economy. Markets are
declining. Why? Because the FED has been very liberal with its debt/credit/money.
The market was hyper inflated. Who creates inflation? The FED. How does
the FED deal with inflation? They restrict the debt/credit/money. What
happens when they do that? The market collapses.
Several months back, after certain central banks said they would be
selling large quantities of gold, the price of gold fell to a 25-year
low of about $260 per ounce. The central banks then bought gold. After
buying at the bottom, a group of 15 central banks announced that they
would be restricting the amount of gold released into the market for
the next five years. The price of gold went up $75.00 per ounce in just
a few days. How many hundreds of billions of dollars did the central
banks make with those two press releases?
Gold is generally considered to be a hedge against more severe economic
conditions. Do you think that the private banking families that own
the FED are buying or selling equities at this time? (Remember: buy
low, sell high.) How much money do you think these FED owners have made
since they restricted the money supply at the top of this last current
Alan Greenspan has said publicly on several occasions that he thinks
the market is overvalued, or words to that effect. Just a hint that
he will raise interest rates (restrict the money supply), and equity
markets have a negative reaction. Governments and politicians do not
rule central banks, central banks rule governments and politicians.
President Andrew Jackson won the presidency in 1828 with the promise
to end the national debt and eliminate the SBUS. During his second term
President Jackson withdrew all government funds from the bank and on
January 8, 1835, paid off the national debt. He is the only president
in history to have this distinction. The charter of the SBUS expired
Without a central bank to manipulate the supply of money, the United
States experienced unprecedented growth for 60 or 70 years, and the
resulting wealth was too much for bankers to endure. They had to get
back into the game. So, in 1910 Senator Nelson Aldrich, then Chairman
of the National Monetary Commission, in collusion with representatives
of the European central banks, devised a plan to pressure and deceive
Congress into enacting legislation that would covertly establish a private
This bank would assume control over the American economy by controlling
the issuance of its money. After a huge public relations campaign, engineered
by the foreign central banks, the Federal Reserve Act of 1913 was slipped
through Congress during the Christmas recess, with many members of the
Congress absent. President Woodrow Wilson, pressured by his political
and financial backers, signed it on December 23, 1913.
The act created the Federal Reserve System, a name carefully selected
and designed to deceive. "Federal" would lead one to believe
that this is a government organization. "Reserve" would lead
one to believe that the currency is being backed by gold and silver.
"System" was used in lieu of the word "bank" so
that one would not conclude that a new central bank had been created.
In reality, the act created a private, for profit, central banking corporation
owned by a cartel of private banks. Who owns the FED? The Rothschilds
of London and Berlin; Lazard Brothers of Paris; Israel Moses Seif of
Italy; Kuhn, Loeb and Warburg of Germany; and the Lehman Brothers, Goldman,
Sachs and the Rockefeller families of New York.
Did you know that the FED is the only for-profit corporation in America
that is exempt from both federal and state taxes? The FED takes in about
one trillion dollars per year tax free! The banking families listed
above get all that money.
Almost everyone thinks that the money they pay in taxes goes to the
US Treasury to pay for the expenses of the government. Do you want to
know where your tax dollars really go? If you look at the back of any
check made payable to the IRS you will see that it has been endorsed
as "Pay Any F.R.B. Branch or Gen. Depository for Credit U.S. Treas.
This is in Payment of U.S. Oblig." Yes, that's right, every dime
you pay in income taxes is given to those private banking families,
commonly known as the FED, tax free.
Like many of you, I had some difficulty with the concept of creating
money from nothing. You may have heard the term "monetizing the
debt," which is kind of the same thing. As an example, if the US
Government wants to borrow $1 million ó the government does borrow
every dollar it spends ó they go to the FED to borrow the money.
The FED calls the Treasury and says print 10,000 Federal Reserve Notes
(FRN) in units of one hundred dollars.
The Treasury charges the FED 2.3 cents for each note, for a total of
$230 for the 10,000 FRNs. The FED then lends the $1 million to the government
at face value plus interest. To add insult to injury, the government
has to create a bond for $1 million as security for the loan. And the
rich get richer. The above was just an example, because in reality the
FED does not even print the money; it's just a computer entry in their
accounting system. To put this on a more personal level, let's use another
Today's banks are members of the Federal Reserve Banking System. This
membership makes it legal for them to create money from nothing and
lend it to you. Today's banks, like the goldsmiths of old, realize that
only a small fraction of the money deposited in their banks is ever
actually withdrawn in the form of cash. Only about 4 percent of all
the money that exists is in the form of currency. The rest of it is
simply a computer entry.
Let's say you're approved to borrow $10,000 to do some home improvements.
You know that the bank didn't actually take $10,000 from its pile of
cash and put it into your pile? They simply went to their computer and
input an entry of $10,000 into your account. They created, from thin
air, a debt which you have to secure with an asset and repay with interest.
The bank is allowed to create and lend as much debt as they want as
long as they do not exceed the 10:1 ratio imposed by the FED.
It sort of puts a new slant on how you view your friendly bank, doesn't
it? How about those loan committees that scrutinize you with a microscope
before approving the loan they created from thin air. What a hoot! They
make it complex for a reason. They don't want you to understand what
they are doing. People fear what they do not understand. You are easier
to delude and control when you are ignorant and afraid.
Now to put the frosting on this cake. When was the income tax created?
If you guessed 1913, the same year that the FED was created, you get
a gold star. Coincidence? What are the odds? If you are going to use
the FED to create debt, who is going to repay that debt? The income
tax was created to complete the illusion that real money had been lent
and therefore real money had to be repaid. And you thought Houdini was
So, what can be done? My father taught me that you should always stand
up for what is right, even if you have to stand up alone.
If "We the People" don't take some action now, there may come
a time when "We the People" are no more. You should write
a letter or send an email to each of your elected representatives. Many
of our elected representatives do not understand the FED. Once informed
they will not be able to plead ignorance and remain silent.
Article 1, Section 8 of the US Constitution specifically says that Congress
is the only body that can "coin money and regulate the value thereof."
The US Constitution has never been amended to allow anyone other than
Congress to coin and regulate currency.
Ask your representative, in light of that information, how it is possible
for the Federal Reserve Act of 1913, and the Federal Reserve Bank that
it created, to be constitutional. Ask them why this private banking
cartel is allowed to reap trillions of dollars in profits without paying
taxes. Insist on an answer.
Thomas Jefferson said, "If the America people ever allow private
banks to control the issuance of their currencies, first by inflation
and then by deflation, the banks and corporations that will grow up
around them will deprive the people of all their prosperity until their
children will wake up homeless on the continent their fathers conquered."
Jefferson saw it coming 150 years ago. The question is, "Can you
now see what is in store for us if we allow the FED to continue controlling
condition upon which God hath given liberty to man is eternal vigilance;
which condition if he breaks, servitude is at once the consequence of
his crime, and the punishment of his guilt."
John P. Curran
Great Books About The Federal Reserve