Who Are These People Anyway?
by Robert M. Hamburger
Aug 14, 2008 | 597 views | 0 0 comments | 8 8 recommendations | email to a friend | print
GUEST COMMENTARY



I was only in kindergarten when President Kennedy was gunned down in Dallas in November of 1963, but I remember feeling my parents’ shock and sadness while watching the television, which was on constantly as the news unfolded. Who could kill the president, I wondered. Two days later, the TV was still on, this time as Lee Harvey Oswald, accused of assassinating the president, was killed by Jack Ruby. Even at such a young age, I sensed foul play – and from this point on began questioning the way things appear versus the way they actually are.

Several years later, after Thanksgiving dinner was over, I sat alongside my grandfather and uncles, and, with Kennedy’s death still fresh in my memory, listened as they discussed the Federal Reserve Bank. Though the workings of government and the banking system aren’t the normal fascinations of a 4th grader, I listened with interest to what the adults were saying. “There is nothing federal about the Federal Reserve,” my grandfather said. “One day, the dollar will be worthless and the country will suffer immensely. Over time, history will repeat itself and the dollar will go the way of every other man-made currency.”

That night, I learned a few more things about the “Fed.” Though it is government sponsored, controlled, and supported, it is actually owned by private bankers – with its original 300 stockholders including such notable names as Rothschild, Warburg, Lehman, Lazard, Kuhn, Loeb, Chase, and Morgan. Today, not only are the current shareholders not known to the public, the Fed's books are not open to the public nor has Congress ever audited them. The credit extended by the Fed’s twelve regional banks is in practice (though not legally) backed by the taxing power of the federal government – meaning the taxpaying public.

Last month, a headline from The New York Times caught my eye, and – not by any means for the first time – I revisited the prophecies of my grandfather. “Treasury Secretary Henry M. Paulson, Jr.,” the article stated, “asked policy makers in a speech on Thursday to move swiftly to give greater tools and authority to the Federal Reserve to handle financial crises.” Paulson went on to state that, “We should quickly consider how to most appropriately give the Fed the authority to access necessary information from highly complex financial institutions and the responsibility to intervene in order to protect the system, so they can carry out the role our nation has come to expect – stabilizing the overall system when it is threatened.”

The article might as well have read, “Bush’s head business man is hoping to further empower a private banking cartel made up of unknown shareholders to oversee our economic futures.”

While volumes have been written about the Fed, here’s my take – in an extremely condensed version – on the way things work: The Fed creates money from nothing, loans it back to our government (us), then charges us interest on our (their) currency. Or, how about this: the Fed buys Government debt with money printed on a printing press, and the U.S. taxpayers get stuck with the bill, paying interest on money that the bankers create with simple computer entries.

Henry Ford once said, "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." He was, without a doubt, referring to the Federal Reserve and the arrangement I have just described above.

Our Constitution (Article 1, Section 8) intended to protect us from this kind of system, stating that “Congress shall have the power to create money and regulate the value thereof.” However the Federal Reserve Act, hurriedly (and almost secretly) passed two nights before Christmas on December 23, 1913 (while most members had already returned to their homes and families for the holiday) took the power to create money from the people and gave it to private bankers. As a result, the money we use on a daily basis “belongs” to people unknown to us. Today, with Bush at the helm, these same people are – unbelievably – being granted even more power.

Keeping these machinations in mind, the past few years have unfolded rather predictably. In simple terms, the dynamics of fiat currency lead to excessive borrowing which has now brought us to the doorstep of the unfolding financial crisis. While the media continues to praise the Fed and even claim that the economy is strong, it’s all baloney, because even at this point, the laws of economics and nature have prevailed: housing is in trouble, the dollar purchases far less than it did just a couple of years ago, and gold has soared.

Looking ahead, I don’t see it getting any better. I believe that soon after the Olympics, China will allow its currency to trade freely (float), no longer pegging it to the dollar, as it has done up until now. Should that happen, the dollar will continue to tumble, as so many of the currencies from indebted Latin and South American countries have done in recent decades. Prices of goods and products will rise while the value of our assets will continue to sink. And, of course, in time, the cost of real capital (as opposed to the printing press kind) will come at greater cost, sending interest rates higher.

Meanwhile a greater number of financial institution failures (ie, Bear Stearns, IndyMac) is imminent – almost preordained. The $30 billion that the government authorized for JP Morgan’s purchase of Bear Stearns along with the $30 billion that Congress and Bush just authorized for Fannie Mae and Freddie Mac will soon seem like peanuts – not to mention the fact that the government has historically underestimated such expenditures. Remember that the war in Iraq was also only supposed to cost $30 billion. In fact, influential economist and New York University Professor Nouriel Roubini recently told Barron's that, “Taxpayers will pay a big price for helping bail out the rest of the financial services industry as well – at least $1 trillion and more likely $2 trillion.”

Such solutions represent only more of the same poison that got us here in the first place. As Ron Paul, Texas Congressman and former presidential candidate has posted on his website, “Some mistakenly identify the falling home prices as the disease instead of merely a symptom – which they plan to fix with more easy credit and more liquidity to push more unqualified buyers back into the market for homes they still cannot afford. This is akin to the drug addict identifying withdrawal symptoms as his problem and searching for another fix as his solution. The cycle continues and the problems compound themselves. The addiction deepens.”

All this leaves me wondering: How is it that our elected leaders can authorize the people/taxpayers of this country to become obligated for such expenditures in good conscience – especially given the fact that they are only bailing out the crooks who created the mess in the first place? While I am not a proponent of governmental bail-outs of those in financial distress, I question why the government bails out the institutions with taxpayer money rather than the taxpayers themselves.

One thing, at least, is certain: Bush, Paulson and all their pals in the banking industry will retire on golf courses comfortably and at our expense. While their dollars may have lost value, they will have accumulated more than enough to compensate. And our children and grandchildren will be picking up the tab for many years to come.
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