Issue: Economic: On the Federal Reserve

[CurtisLow]

True or false?

The FED creates money from nothing, and loans it back to us through banks, and charges interest on our currency. The FED also buys Government debt with money printed on a printing press and charges U.S. taxpayers interest. Many Congressmen and Presidents say this is fraud. Who actually owns the Federal Reserve Central Banks? The ownership of the 12 Central banks, a very well kept secret, has been revealed: 1. Rothschild Bank of London 2. Warburg Bank of Hamburg 3. Rothschild Bank of Berlin 4. Lehman Brothers of New York 5. Lazard Brothers of Paris 6. Kuhn Loeb Bank of New York 7. Israel Moses Seif Banks of Italy 8. Goldman, Sachs of New York 9. Warburg Bank of Amsterdam 10. Chase Manhattan Bank of New York.


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[Bradley in DC]

A new article from the Independent Institute that might be of interest:

http://www.independent.org/publications/tir/article.asp?issueID=48&articleID=612

Gold Standards and the Real Bills Doctrine in U.S. Monetary Policy
By Richard H. Timberlake

Discounting the differences between the self-regulating classical gold standard that prevailed before World War I and the government-managed gold-exchange standard that replaced it, many writers have erroneously blamed “the gold standard” for the inability of Federal Reserve Board policymakers to implement countercyclical policies in 1929–33 and thus to prevent the Great Depression. Worse, they have failed to identify the true culprit in the monetary system of that era—the fallacious real bills doctrine, which guided Fed policy.

 

[fsk]

I read that the Great Depression was caused by insiders manipulating interest rates for their own benefit. At that time, the Federal Reserve didn't publish its interest rate target in advance. The banks who knew that credit was going to be tightened knew in advance to stop issuing loans. They converted all their holdings to cash. After the crash, they bought assets cheap.

Interest rates weren't loosened until after Roosevelt became president so he could take credit for the recovery.

http://the7thfire.com/Politics and ...ts_of_the_federal_reserve_TC.htm#Introduction

 

[RonPaul4President]

Inevitably, there will be a market crash. Whenever the people rise up in revolt against the system the Fed deprives the economy of money and crashes the stock market. All wealth and property that is not in physical possession of it's owner, and/or fully paid for, will be claimed by the money lender(s). The wealth is not lost nor does it disappear into thin air. It is tranferred from those that are indebted to the banks(debtors) to those that OWN the banks(the money lenders). Don't expect the government to step into save you because the government is run by these scoundrels. It is for this very reason we have the 2nd Amendment. Use it!

 

[fsk]

There will soon be a market crash. Mark my words. Whenever the people rise up in revolt against the system the Fed deprives the economy of money and crashes the stock market. All wealth and property that is not in physical possession of it's owner, and/or fully paid for, will be claimed by the lender(s). The wealth is not lost nor does it disappear into thin air. It is tranferred from those that are indebted to the banks(debtors) to those that OWN the banks(the money lenders).

There is one possibility. If the Federal Reserve is abolished, the government would need to print enough new money to ensure an adequate money supply. It could print money and repurchase debt. It could directly spend the money or cut taxes.

All the government has to do is print "This note is legal tender" and it'll be as valid as the Federal Reserve Notes.

 

[RonPaul4President]

There is also another possbility. A non-currency currency. For example, my pay goes directly to my bank and I use a debit card for ALL my purchases. At no point does "currency" come into play. It is a system based solely on currency points. If we removed the middleman(the banks) credit could go directly from the employer to the employee via a debit card. The employee is given a debit card for his/her work instead of a check that needs to be cashed at a bank. Some would say that there is a risk of dishonesty on the employers side but that same risk exists today. This system is private and confidential between the employer and employee. The government nor the banks have any say or control over the flow of this forum of currency point system. As many now know, the IRS does not have any Constitutional right to deduct taxes on labor, as well as many other forms of earnings they now steal from Americans. Income tax is a trick used by the government to pay interest on the debt it has to the money lenders. Our income tax goes directly to funding WAR. Income tax is tool used by global bankers/federal reserve to remain in power, and WE pay for it. It's the perfect crime and they are getting away with it.

 

[fsk]

The problem with a private monetary system is that you still have to pay income taxes in regular dollars. In the eyes of the IRS, barter transactions are taxable income. Income taxes must be paid in dollars.

Even if you are legally correct, the IRS will still hassle you. They have more resources than you and can make you waste time and money defending yourself in court. There is no guarantee you would get a jury that understands the complicated issues.

If there was no income tax, then a private monetary system would be viable.

I agree with you in principle. The IRS and worthless fiat money are inherently wrong. However, the way the courts and the IRS act mean that no progress can be made without changing the laws or the way courts interpret the constitution.

 

[Carl]

There is also another possbility. A non-currency currency. For example, my pay goes directly to my bank and I use a debit card for ALL my purchases. At no point does "currency" come into play. It is a system based solely on currency points. If we removed the middleman(the banks) credit could go directly from the employer to the employee via a debit card. The employee is given a debit card for his/her work instead of a check that needs to be cashed at a bank. Some would say that there is a risk of dishonesty on the employers side but that same risk exists today. This system is private and confidential between the employer and employee. The government nor the banks have any say or control over the flow of this forum of currency point system. As many now know, the IRS does not have any Constitutional right to deduct taxes on labor, as well as many other forms of earnings they now steal from Americans. Income tax is a trick used by the government to pay interest on the debt it has to the money lenders. Our income tax goes directly to funding WAR. Income tax is tool used by global bankers/federal reserve to remain in power, and WE pay for it. It's the perfect crime and they are getting away with it.

Who pays for the setup, maintenance and administration of this system?

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[RonPaul4President]

Good question. I'm just throwing a suggestion around. All the employer needs is a card press and the cards. The stores that honor this form of credit would pay for their end to attract customers just as they do now. Whenever you use a debit or credit card, they(the seller) have to pay a "fee" to the banks. Now, the real dilemna is, what does the store do with that credit and how do they store and use it themselves. Originally, banks were used to store people's gold. Then the paper/fiat money came into existance as a receipt for said gold. The banks then became the backbone of this system. We need to remove the banks from the currency equation to ensure we are never tricked again. I'll leave the rest up to someone smarter than me.

 

[fsk]

Who pays for the setup, maintenance and administration of this system?

It would be very easy to set up a private monetary system. It would take a competent programmer a year or two to write the software and open-source it. The trick would be convincing people to adopt it.

It should be possible to set up such a system using strong cryptography and making it a distributed P2P system. It would have to be distributed rather than centralized because the IRS would crack down on any centralized organizer. The IRS probably has access to techniques that would crack any cryptography the average person would use.

The problem is that the IRS will try to shut down any private monetary system. According to the IRS, any barter transactions are taxable as regular income.

There is no incentive for people to adopt a private monetary system, because the IRS would crack down on the participants. The only way it would work is if a substantial percentage of people started using it before the IRS noticed and started cracking down.

 

[RonPaul4President]

The problem is that the IRS will try to shut down any private monetary system. According to the IRS, any barter transactions are taxable as regular income.

Some excellent ponts. However, in a free country the IRS would not exist. I'm assuming that the IRS and Federal Reserve have been abolished at this point and we can start over, gradually replacing fiat money(worthless paper) with a tangible, yet intangible, currency point system. At this point honest government, as impossible as it sounds, would be a necessity to maintain fiscal order. I think the reason so many politicians aren't willing to fight against this is because they feel overwhelmed. I hope that, united as a people, we can return courage to their broken hearts and wisdom to their molested minds.

 

[fsk]

The problem is that the Federal Reserve and IRS have been around for so long that they couldn't just be instantly abolished.

If you abolish the Federal Reserve, there would be chaos in the financial markets. Interest rates would spike up 5% or more. Since the only money currently in circulation exists as debt, all the money would drain out of the economy as more loans were repaid than issued.

If you abolish the IRS, then the value of the dollar would fall to zero. Right now, there is a certain demand for dollars because the government demands them as payment for income taxes. You need income taxes to prop up the value of the dollar, due to the demand for dollars created by the government.

Think of a dollar as a receipt that says "bearer allowed to conduct $3 of economic activity" (assuming 33% federal tax income tax rates). This receipt is valid because the IRS will invade people's privacy and use force to collect the receipts.

In other words, "instantly abolish the IRS and Federal Reserve" would be a recipe for complete economic chaos. They would have to be phased out gradually.

For example, interest rates could be allowed to gradually be raised to a free market level, and income tax rates could be lowered gradually to zero. The problem is that this whole process would take longer than one President's term, if you want to do it properly.

 

[Carl]

The problem is that the Federal Reserve and IRS have been around for so long that they couldn't just be instantly abolished.

If you abolish the Federal Reserve, there would be chaos in the financial markets. Interest rates would spike up 5% or more. Since the only money currently in circulation exists as debt, all the money would drain out of the economy as more loans were repaid than issued.

If you abolish the IRS, then the value of the dollar would fall to zero. Right now, there is a certain natural demand for dollars because the government demands them as payment for income taxes. You need income taxes to prop up the value of the dollar, due to the natural demand for dollars created by the government.

Think of a dollar as a receipt that says "bearer allowed to conduct $3 of economic activity" (assuming 33% federal tax income tax rates). This receipt is valid because the IRS will invade people's privacy and use force to collect the receipts.

In other words, "instantly abolish the IRS and Federal Reserve" would be a recipe for complete economic chaos. They would have to be phased out gradually.

For example, interest rates could be allowed to gradually be raised to a free market level, and income tax rates could be lowered gradually to zero. The problem is that this whole process would take longer than one President's term, if you want to do it properly.

If you abolished the Fed there would be no interest rates, as they would go with the Fed and their Fiat currency. Currency related activities that are not linked to the actual production of products and product related services will also bite the dust. Goodbye Hedge Funds, your 2.4 trillion dollar nonsense will not be missed. So on and so on.......

Will there be economic chaos, yes. It cannot be avoided but when the smoke clears and the dust settles we will be in a far better position to rebuild an economy that is real and legitimately prosperous.

 

[fsk]

I don't think that's part of Ron Paul's platform. "I'm the candidate for complete economic chaos."

Ron Paul hasn't exactly said what his plan would be after he abolished the Federal Reserve and IRS. I think they can be abolished or reformed without things getting totally out of hand.

 

[Carl]

I don't think that's part of Ron Paul's platform. "I'm the candidate for complete economic chaos."

Ron Paul hasn't exactly said what his plan would be after he abolished the Federal Reserve and IRS. I think they can be abolished or reformed without things getting totally out of hand.

It's possible, if we can get the Federal Reserve, other Central Banks, World Bank and the Bank for International Settlements to cooperate in the transition, of course they'll be wondering what's in it for them that they would give up such a valuable resource as the U.S. Economy.

You just can't take half of the red pill, you have to swallow the whole thing.

But I suppose we could just have the Treasury Department start printing notes under their name to replace the Federal Reserve notes and continue on as if we've accomplished something grand and high minded.


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[fsk]

But I suppose we could just have the Treasury Department start printing notes under their name to replace the Federal Reserve notes and continue on as if we've accomplished something grand and high minded.

Actually, it would be an accomplishment. Without the Federal Reserve, interest rates would be market-determined instead of fixed at an artificially low level. That would lead to more efficient allocations of capital.

 

[unconsious767]

Theres an -->interesting thread<-- in this techie forum, some calling Ron uneducated regarding economics and gold.

I've tried with these guys before, maybe someone more eloquent and knowledgable take a stab?

 

[Gee]

Ron Paul hasn't exactly said what his plan would be after he abolished the Federal Reserve and IRS. I think they can be abolished or reformed without things getting totally out of hand.

He's stated he doesn't think we can abolish it at this point, so he just wants to legalize the competition (i.e., other forms of currency).

 

[Carl]

Actually, it would be an accomplishment. Without the Federal Reserve, interest rates would be market-determined instead of fixed at an artificially low level. That would lead to more efficient allocations of capital.

I was thinking about this, again, this morning and I believe that simply replacing FRN's with Treasury Notes is the right track and I was also thinking that we take the FRN's and buy all the assets held by the cabal of banks that serve as the Federal Reserve System. They get their FRN's back and we get our assets back and everyone walks away happy. Of course FRN's will no longer be accepted or associated with the United States but hey, that's the issuer's problem not ours.

I just hope they have enough assets to cover all the FRN's they've floated out there.


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[G-khan]

I don't think that's part of Ron Paul's platform. "I'm the candidate for complete economic chaos."

Ron Paul hasn't exactly said what his plan would be after he abolished the Federal Reserve and IRS. I think they can be abolished or reformed without things getting totally out of hand.

You could get rid of the IRS (income tax) right away and stop funding other countries and financing wars and we still would have more money than we had when we had the income tax!