After publishing Part One of my article about the Federal Reserve System, I received many replies from readers, most of whom we positive about the expose, and many looking to hear my position on a solution to this "corrupt den of thieves" known simply as The FED. Here in part two I will layout an alternative solution for managing the nation's money that has proven to be both transparent and affective.
Let's start with the words of President Andrew Jackson in regards to central banking and Congress:
"If Congress has the right under the Constitution to issue paper money, it was given to be used by themselves, not to be delegated to individuals or corporations."
Like other Presidents who had their eye on the country's monetary policies, when entertaining such ideas it seems a president is at great risk of being removed from office either by trumped-up charges for impeachment (Andrew Johnson), or by assassination (Abraham Lincoln, James Garfield, William McKinley, John "JFK" Kennedy) and assassination attempts (Andrew Jackson, Zachery Taylor, James Buchanan, Gerald Ford, Ronald Reagan). Many believe there is a sinister cloud that hangs over The FED.
While many presidents spoke ill of the farming-out the control of the country's central banking and monetary policy, so too did many members of Congress:
“Most Americans have no real understanding of the operation of the
international money lenders. The accounts of the Federal Reserve System
have never been audited. It operates outside the control of Congress and
manipulates the credit of the United States.” President William McKinley
“Every effort has been made by the Federal Reserve Board to conceal its
powers, but the truth is that the Federal Reserve System has usurped the
government. It controls everything in congress and it controls all our
foreign relations. It makes and breaks governments at will.” Senator Barry Goldwater
Those who are astute in politics understand that Congressional Oversight basically means that Congress gets to see the results when it’s over... They don't really oversee any of the operation. The U.S. Constitution gave U.S. monetary control to Congress. Congress in turn relegated its duty to The Federal Reserve Bank in 1913, ceding its power to a secondary authority over which it has little control. The FED periodically reports to Congress, but the FED doesn’t ask Congress for anything…by its actions it tells Congress what to do. According to Ellen Brown, an authority on the operation of the Federal Reserve, "the only real leverage Congress has over the Fed is that it can alter its responsibilities by statute. It is time for Congress to exercise that leverage and make the Federal Reserve a truly federal agency, acting by and for the people through their elected representatives".
So…who really owns the FED? If you believe Ron Paul, Gary Kah, and Eustace Mullins, all of whom have studied the FED in detail, the list might surprise you. The original intent was that The FED would be organized as a corporation in much the same way as many other firms with twelve Federal Reserve Banks owning the stock. According to Kah, foreigners (see the below list of dubious characters) own a controlling interest in the shares of the New York Federal Reserve, and insists the top eight shareholders have ties to “Jews, Swiss and Saudi Arabian contacts”. Remember, this is just one of the twelve Federal Reserve Banks
- Rothschild Banks of London and Berlin
- Lazard Brothers Banks of Paris
- Israel Moses Seif Banks of Italy
- Warburg Bank of Hamburg and Amsterdam
- Lehman Brothers of New York
- Kuhn, Loeb Bank of New York
- Chase Manhatten Bank, New York
- Goldman, Sachs of New York
Mullins compiled a very different list contending the below institutions owned a combined 63% of the New York Fed’s stock. "These American banks, in turn, were owned by European financial institutions. Since the commercial banks in the New York Fed's district elect its board of directors, the London Connection is able to use their American agents to pick the Bank's directors and ultimately control the whole Federal Reserve System". He reported that the top 8 stockholders of the New York Fed were
- Chase Manhattan Bank
- Morgan Guaranty Trust
- Chemical Bank
- Manufacturers Hanover Trust
- Bankers Trust Company
- National Bank of North America, and
- Bank of New York.
Mullins further contends that the day the Federal Reserve Act was passed in 1913, the Congress, through the power of the U.S. Constitution ceased to be the governing body of the American people, and that by creating the FED our liberties were handed over to a small group of international bankers. But one must quarry…"does control over the New York Federal Reserve Bank constitute control over all twelve?"
Clearly, there is a difference in the above lists. Since the two authors published their lists eight years apart, it may be possible that sometime between 1983 and 1991 foreigners acquired a substantial amount of stock in the New York Fed. But what if they're both wrong?
According to Political Research Associates (Political Research Associates is a progressive think tank devoted to supporting movements that are building a more just and inclusive democratic society. They expose movements, institutions, and ideologies that undermine human rights.) They allege that the contention that an international banking cartel controls the Federal Reserve is wrong, and that foreigners do not own any stock in the New York Federal Reserve Bank. They also state foreigners do not currently own any significant shares of the domestic banks that actually do own shares in the N.Y. Federal Reserve.
Regardless, all those with speculations about the ownership of the twelve Federal Reserve Banks and the FED System as a whole have one thought in common…The FED operates under a specious cloud of Congressional oversight when in fact it is an entity that is cloaked in secrecy, and not operated in the best interests of the American people, but only for the profit that can be rung from the taxpayers of our country.
So if not the current Federal Reserve, then what?
The goal of establishing the Federal Reserve was to provide monetary stability with the U.S. currency, but the one hundred year old system, has shown itself to be all about cronyism, is too much of an insider's club and is under close scrutiny by everyone. The charges of corruption are well founded and were graphically demonstrated by the 2008-2009 financial collapse when the government made the choices of winners and losers by flooding troubled businesses with money being printed as fast as possible by the Fed, with their member banks in line for billions of dollars in interest.
Perhaps the Fed can be saved with proper legislation, but one thing clear to me is that whatever course we take, the monetary system of the U.S. is of such vital interest to every American, it must fall under complete oversight of the U.S. Congress and we must install a system of checks and balances. It can no longer remain completely independent to run its own course, while raping the U.S. taxpayer over the interest it collects.
Perhaps it is time to take a look at the Hong Kong Monetary Authority for a viable solution.
Banks in Hong Kong are divided into three tiers of authorized institutions. The main distinctions lie in the deposit business each tier is allowed to conduct under the Banking Ordinance. The three tiers of authorized institutions are Licensed Banks, Restricted License Banks, and Deposit-taking Companies.
The principal function of the HKMA as banking supervisor is to promote the general stability and effective working of the banking system in Hong Kong. The HKMA seeks to ensure that authorized institutions operate in an effective, responsible, honest and business-like manner and to provide a measure of protection to depositors. Its powers to meet these objectives come from the Banking Ordinance.
The Licensed Banks may operate demand deposit and savings accounts, and accept deposits of any size and maturity from the public. They may pay or collect checks drawn by or paid in by customer
Restricted Licensed Banks are restricted to deposits made by the public of HK$500,000 or more without a restriction on maturity.
Deposit Banking Companies are restricted to taking deposits for the public with an original term to maturity of at least three months
Like the FDIC, Hong Kong has a deposit insurance program where deposits are protected up to HK$500,000 per depositor. The program is underwritten by the Deposit Protection Scheme Ordinance which maintains the stability of Hong Kong’s banking system.
The HKMA’s activities are financed by the Exchange Fund to ensure a level of resource independence appropriate to a central banking institution. The HKMA reports to the Financial Secretary, who is the Controller of the Exchange Fund. In this capacity, the Financial Secretary is advised by the Exchange Fund Advisory Committee (EFAC). Five specialized sub-committees report and make recommendations to EFAC (Exchange Fund Authorization Committee) all done with complete transparency:
- Governance Sub-committee
- Audit Sub-committee
- Currency Board Sub-committee
- Investment Sub-committee
- Financial Infrastructure Sub-Committee
The key to the success of the Hong Kong system is its transparency. The HKMA is accountable to the people of Hong Kong through the Financial Secretary and the laws passed by the Legislative Council. There is a formal commitment from the Chief Executive of the HKMA to appear before the Legislative Council’s Panel on Financial Affairs three times a year to brief Members and to answer questions on the HKMA’s work. Representatives from the HKMA also attend Legislative Council meetings from time to time to explain and discuss particular issues, and to assist Members in their scrutiny of draft legislation. It works so well, the Chinese Communists didn't interfere when they took over control of Hong Kong from the British.
Auditing of the Federal Reserve would be the first step toward restoring our monetary policy that is supposed to work for the benefit of the American people, not the special interest groups. Once Congress and the public get a look inside the Fed and fully understand its inner workings, we will be in a better position to reform the country's monetary system. As volatile as the global economy is and because it is interwoven more tightly than at any time in history, it is essential we get it right on the first try. The success that transparency brings to the Hong Kong system would be a great starter.
In closing the case for changing the Federal Reserve, I couldn't agree more with Political Research Associates, "if the Fed was actually a federal agency, the government could issue U.S. legal tender directly, avoiding an unnecessary interest-bearing debt to private middlemen (The FED) who create the money out of thin air themselves. Among other benefits to the taxpayers, a truly “federal” banking system could lend the full faith and credit of the United States to state and local governments interest-free, cutting the cost of infrastructure in half, restoring the thriving local economies of earlier decades.