By Stephen Lendman sjlendman.blogspot.com 6/29/06

Years ago I read William Greider’s excellent book published in 1987 on how the US Federal Reserve System works. It was detailed and explicit and makes wonderful and informative reading, except for the solution he suggests to a huge problem. His was far too timid. This article proposes a much different one. Greider called his book Secrets of the Temple with a sub-title: How the Federal Reserve Runs the Country. A better sub-title might have been how the Fed (and other key central bankers) runs the world. This article attempts to summarize what it does, how it does it, for whose benefit and at whose expense. For those who don’t know, prepare for some stunning information and commentary.

Let’s be clear at the outset. The US Federal Reserve, Bank of England, Bank of Japan and the European Central Bank (for the 12 European countries that adopted the single euro currency in 1999) are institutions with enormous power far beyond what most people everywhere can imagine. These most dominant of all central banks, as well as most others, have a powerful influence on the financial conditions in virtually all countries including their own, of course, in an increasingly borderless financial world where a significant economic event in one nation can affect most others for better or worse.

One other powerful bank is also part of today’s financial world. It needs mentioning because of its importance, even though it requires a separate article to explain how it works more fully. It’s the secretive, inviolable and accountable to no one Bank of International Settlements (BIS) founded in 1930 and based in Basle, Switzerland. This bank most people never heard of is the central banker to its member central banks – a sort of banking “boss of bosses” equivalent to what apparently exists in the shadowy world of Mafia dons. Like most other central banks, including the Federal Reserve (explained below), it’s privately owned by its members.

It’s believed by some academicians and others who’ve studied the BIS that the ruling elite of financial capitalism established this bank of banks to be the apex of power to exercise authority over a world financial system owned and controlled by them. It’s thought their plan was to use this bank to dominate the political system of every country and control the world economy in a feudalistic fashion. In a word, the thinking goes that these super-elite want to rule the world by controlling its money, and they set up this supranational all-powerful bank of banks to do it. As important as that is, that discussion remains for another time as the intent of this article is to focus solely on the US Federal Reserve.

The dominant central banks and BIS, together with most others, wield their influence in cartel-like alliance with each other to assure they all benefit more than they otherwise would without such a cozy arrangement. With their immense power it’s no play on words to say these financial institutions do indeed rule the world. Because they’re able to create money, they fund the needs of their governments, their militaries and all business activity that couldn’t function without a ready supply of that most needed of all commodities. It’s money, not love, that makes the world go round, and central bankers have the power to create or remove from circulation as much or little of it as they choose and for whatever purpose they have in mind. That kind of power can move mountains or destroy them.

No nation’s central bank is more powerful today than the US Federal Reserve, but it wasn’t always that way, and it now has competition for the top spot it hasn’t known since WW II. The Fed, as it’s called, has existed since it was first established by an act of Congress in 1913. But the Bank of England has been around since Britannia ruled the waves beginning in 1694 when King William III needed help funding the kind of escapade that takes lots of ready cash – war. Back then it was with France, and the king needed a friendly banker to print it up for him to help him fight it. He also needed financial help to facilitate trade and manage the country’s debt that always mounts up when wars are fought. The Bank of England wasn’t the first central bank, but it was the modern world’s first privately owned one in a powerful country. It was called the Bank of England to keep the public from knowing that it, like our Federal Reserve, was and still is privately owned and not part of the government. It was also the model used in the formation of our own central bank and most others.

The Brits may have had a 219 year head start on the Fed, but central bankers are only as powerful as the countries they represent and their economies. Today the former dominant Brits must settle for a far lesser role as being just one of many junior partners to a US hegemon that emerged post WW II as the world’s dominant economic power. It still is today, even though some credible experts believe this country may have seen and past its peak and is now in decline. Some go further and claim our decline has been accelerated by the disastrous policies of the Bush administration that irrationally believes waging war on the world without end is the way to rule it, promote endless economic growth and dominance, and thus preserve the nation’s preeminent position as the reigning economic champion.

It’s easy to challenge that view and think that champ has climbed into the ring a few times too many, has endless plans for more return engagements, and is likely to meet the same fate many a former human one did who didn’t know when to quit and ended up with chronic brain damage known as dementia. The lesson from history is always the same. The price for reckless behavior is high, painful and inevitable. It’s true for countries as well as individuals, but too often neither one sees it until it’s too late. The biggest difference between the US today and other nations in the past that paid dearly for not yielding when their day had passed is that we have an all-powerful arsenal others never did. Should we decide to use it, there likely wouldn’t be much left behind for a successor. Not a pleasant thought, but a very real one.

It All Began in 1910 On Jekll Island

It sounds like the title of a horror movie, but the real life events that happened at this privately owned island off the coast of Georgia in 1910 would have challenged even the Hollywood bad dream factory to come up with. It was here that seven very rich and powerful men met in secret for nine days and created the Federal Reserve System that came into being three years later on December 23, 1913 by an act of Congress. Since that time, the nation and world would never be the same, but only the rich and powerful were the beneficiaries. That was the whole idea, and it worked as planned.

The Federal Reserve Act that began it all must surely rank as one of the most disastrous and outrageous pieces of legislation to the public welfare ever to come out of any legislative body. It may have also have been and still is illegal according to Article 1, Section 8 of the Constitution which happens to be the inviolable law of the land. The article states that Congress shall have the power to coin (create) money and regulate the value thereof. In 1935, the US Supreme Court ruled the Congress cannot constitutionally delegate its power to another group or body. The Congress thus acted in violation of the Constitution it’s sworn to uphold and in so doing created the Federal Reserve System that, as will be explained below, is a private for-profit corporation operating at the expense of the public welfare. By its action, our lawmakers committed fraud against the people of the country and so far have gotten away with it without the public even knowing about the harm done.

The shameful result is that what should have arrived stillborn is now the most dominant institution on earth, and all because of what began on a privately owned island with a scary name. But had the Congress acted responsibly, the act of Fed creation might never have happened. The legislation establishing it was so harmful to the public interest, it likely never would have passed if it hadn’t been shepherded through a carefully prepared Congressional Conference Committee meeting scheduled for between 1:30 – 4:30 AM (when most members of Congress were asleep) on December 22,
1913. The Act was then voted on the next day and passed although many members of the body had left for the Christmas holidays and most others who stayed behind hadn’t had time to read it or know its contents. Sound familiar? Still it passed (like a thief in the night) and was signed into law by an unwitting or complicit Woodrow Wilson who later admitted he made a terrible mistake saying “I unwittingly ruined my country.” But it was too late for postmortems, and the American people have paid dearly ever since. It’s about time the public understood that and began to demand an end to over 90 years of damage done.

It almost happened 43 years ago when one president decided to act on behalf of the people who elected him. That man was John Kennedy, who before his death planned to end the Federal Reserve System to eliminate the national debt a central bank creates by printing money and loaning it to the government. That debt has now risen to over $8,400,000,000,000 ($8.4 trillion) which every taxpayer must pay for and has done so in the amount of nearly $174,000,000,000 ($174 billion) in just the first three months of 2006. This debt service is now an annualized amount exceeding two-thirds of a trillion dollars. It’s made the bankers rich (which was the whole idea) and the public poorer because we’re taxed to pay the tab. It’s no exaggeration to call this the greatest financial scam in world history and one that gets greater every day.

The debt was less onerous 40 years ago, but Kennedy understood its danger to the country and the burden it placed on the public. Thus, on June 4, 1963, he issued presidential order EO 11110 giving the president authority to issue currency. He then ordered the US Treasury to print over $4 billion worth of “United States Notes” to replace Federal Reserve Notes. He intended to replace them all when enough of the new currency was in circulation so he could end the Federal Reserve System and the control it gave the international bankers over the US government and the public. Just months after the Kennedy plan went into effect, he was assassinated in Dallas in what was surely a coup d’etat disguised to look otherwise and may well have been carried out at least in part to save the Fed System and concentration of power it created that was so profitable for the powerful bankers in the country. Those benefitting from it had good reason to be involved in the plot to save the special privilege they weren’t willing to give up without a fight. It’s a plausible explanation that may explain who may have been behind the assassination and for what reason. Whatever the truth is, the banking cartel was only in distress a short time. Once Lyndon Johnson took office, he rescinded Kennedy’s presidential order and restored the cartel’s former power. It’s kept it ever since and is now, of course, more powerful than ever. Even presidents are unable to stop it and those who would try have a lesson from history to give them pause.

The predecessors of the possible Kennedy coup plotters were the men who met on Jekyll Island in 1910. They represented some of the richest and most powerful men in the world – the Morgans, Rockefellers, Rothschilds of Europe (who dominated all European banking by the mid-1800s and became and still may be the wealthiest and most powerful family of all) and others of great influence and power. Included was a US senator, a high ranking Treasury official, the president of the largest bank in the country at the time, a leading Wall Street figure and the man who would later become the first chairman of the Federal Reserve System. It was quite an assemblage, and they came to accomplish one thing. They wanted to change the ideology and course of American business that up to then was based on marketplace competition and replace it with monopoly. They also knew what Baron M.A. Rothschild understood when he once said: “Give me control over a nation’s currency and I care not who makes its laws.” They knew the wisdom of what’s stated in Proverbs 22:7 as well: “The rich rule over the poor, and the borrower is servant to the lender.”

This was the dawning of the age of powerful cartels when the seven financial titans meeting secretly in the island’s clubhouse decided no longer to compete with each other and wanted the power to arrange it. They were already colluding informally but knew it would all work better under a legally sanctioned cartel. They wanted a banking cartel and got one that flourishes today below the public radar with the tool they wanted most – the ability to control the nation’s money supply that gave them almost unlimited power. The cartel now works cooperatively with their governments and all other powerful transnational corporations in a dominant global alliance that allows them to control the world’s markets, resources, cheap labor and our lives.

The Federal Reserve System Is Not A Government Agency – It’s A Privately Owned Cartel of Powerful Banks Protected By Law

It’s commonly but falsely believed the Federal Reserve System is a function of government and subject to its control. False. It’s often referred to as a quasi-governmental, decentralized central bank, but that’s just cover to disguise what, in fact, it really is: a privately held and operated cartel made to look like the government is in charge. The fact that it’s headquartered in Washington in the formidable and impressive-looking Eccles building (named after a former Fed chairman) is just part of the clever subterfuge. Here’s how it works:

The Fed is composed of a Board of Governors in Washington and 12 regional banks in major cities throughout the country (including in my own city of Chicago where anyone once but no longer could walk up to a teller’s window and buy US Treasury securities). The system also includes many and various member banks including all national banks that are required to be part of the system. Other banks were also allowed to join and many did. The Federal Reserve began operating in November, 1914, almost one year after the Congressional act creating the system the previous year as explained above. It was mandated by law to have the greatest power of any institution in the country – the power to create and control the nation’s money supply.

Most people know little or nothing about money and banking, likely never think about it, and have no idea how what the Fed and bankers do affect their lives. Before writing this article, I had little more than the modest knowledge I learned in a required course on the subject and basic accounting as part of my MBA curriculum 46 years ago. Those courses left out the most important parts of the story and never hinted at anything sinister about how the banking system works in fact. But no one should ever imagine banks were established or intended to be run for our benefit. They surely are not, and anyone suggesting they are should read on. They’re about as beneficial to the public welfare as was the MX Peacekeeper ICBM (the clever language is impressive) intended to carry nuclear warheads back in the mid-80s that had the power to destroy all life on the planet and one day may do it in its old or updated form.

The Federal Reserve Act of 1913 (the law of the land) stipulates that the Federal Reserve Banks of each region are owned by the member banks in it. These Fed banks are privately owned corporations that make a great effort to hide the fact that they, in fact, own what the public largely thinks is part of the public treasury and government. It’s easy to think that as Fed chairmen and seven of the twelve Governors are appointed by the President and approved by the Senate. As such, the FRB is a sort of quasi-government entity, but the fact is the System is a privately owned for profit enterprise just like any other business. It has stockholders like other public corporations that are paid 6% risk free interest every year on their equity holdings. The public doesn’t know this, and it likely wouldn’t be good PR if it found out. People might be even more upset if they learned some of the owners of our Federal Reserve are powerful foreign investors in the UK, France, Germany, The Netherlands and Italy. They’re partners with giant US banks like JP Morgan Chase and Citibank as well as powerful Wall Street firms like Goldman Sachs in a new world order banking cartel that influences and affects business activity everywhere and our lives.

The issue of private ownership of the Federal Reserve Banks has been challenged several times in the federal courts to no avail. Each time the courts upheld the current system under which each Federal Reserve Bank is a separate corporation owned by commercial banks in its region. One such case was Lewis v. United States that was decided by the 9th Circuit Court of Appeals that ruled the Reserve Banks are independent, privately owned and locally controlled corporations.

Our Founding Fathers Had Different Ideas Than the Powerful Men who Met on Jekll Island

Throughout our history, there was disagreement over who should control the power of the nation’s money supply and the right to issue it. The Founding Fathers understood that the British Parliament was forced to levy unfair taxes on its American colonies and its own citizens because the Bank of England had run up so much debt the government needed revenue to reduce it. Benjamin Franklin, in fact, believed that was the real cause of the American Revolution. Most of the Founders also understood the danger that could result from bankers’ accumulating too much wealth and power. James Madison, the main drafter of our Constitution, called them “Money Changers,” referring to the Bible that said Jesus twice drove the Money Changers from the Temple in Jerusalem 2,000 years ago. Madison said:

“History records that the Money Changers have used every form of abuse, intrigue, deceit and violent means possible to maintain their control over governments by controlling money and its issuance.”

Thomas Jefferson was just as strong in his condemnation when he said:

“I sincerely believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a money aristocracy that has set the government at defiance. The issuing power should be taken from the banks and restored to the people to whom it properly belongs.”

Jefferson and Madison understood the dangers of commercial monopolies of all types and tried to assure they never would exist in the new nation. They, in fact, wanted two additional amendments added to the “Bill of Rights” in the Constitution but never got them. They believed to protect the liberty of the people the nation should have “freedom from monopolies in commerce” (what are now giant corporations including the big international banks and Wall Street investment firms) and “freedom from a permanent military,” or standing armies. Try to imagine what the country would be like today if Jefferson and Madison had gotten their way – a country without giant predatory corporations exploiting everyone for profit and without a rampaging military waging war on the world, threatening to destroy it, and doing it so those corporate giants could earn even greater profits.

Full article: sjlendman.blogspot.com