Forum Post: Remember the progressive origins of the Federal Reserve
Posted 12 years ago on Oct. 14, 2011, 10:18 p.m. EST by hebronjames1
(70)
from New York, NY
This content is user submitted and not an official statement
Prior to a central bank, private bankers ruled roost and banking crises were a regular phenomenon (powerful bankers would purposely create panics and wreak havoc on the financial system and real economy). The Fed has its issues and should be reformed but we need a central bank if we want a currency elastic to the needs and demands of our economy. You know what had under the gold standard? The Gilded Age! (aka corporate oligarchy)
Ron Paul and his followers are well known for their anti-Fed rants. This is a man who reveres private property. In fact, he’s even against the Civil Rights Act of 1964 because it infringes on the rights of the private property owner. But when it comes to the Fed, private ownership is bad. Is this a contradiction? Not really, because the Fed isn’t really privately owned. By claiming that it is, Ron contradicts his own reverence for private property and also tells an untruth. All of the other principles in the anti-Fed argument are designed to further arouse suspicion by creating the sense of a secret conspiracy inside this shadowy organization. Anyone who cares should start by finding an objective non-partisan description of the Fed’s structure. It’s a unique organization that blends elements of a private company, a public corporation and a government agency that acts as a regulator. The Fed’s decisions are made by a Board of Governors. My impression is that Ron Paul’s opposition is based on his disapproval of Federal Government in general and his desire to limit it as much as possible. The Fed was created because banking in the US was unstable and inconsistent across the various states. A large modern nation with an international standing like the US could never survive without a stable central banking system and the Fed fits the bill.
Yep.
This would be a compelling argument if banking crises and corporate oligarchy were only problems of the pre-Fed America but they are problems of today while the Fed has more authority than anytime in history.
If the Fed were keeping "currency elastic to the needs and demands of our economy" they would be shrinking the money supply right now as an economy in recession needs to go through a period of deflation and demands falling prices... But the Fed is currently expanding the money supply to create an artificial inflation and push up prices.
This is not meeting needs and demand of the economy. This is deciding the needs and demands of the economy are wrong and the Fed will manipulate prices to levels that they think are correct.
correct
Insane. The same people who own the Fed created the crashes. Problem - Reaction - Solution. Order out of chaos.
I don't advocate abolishing the fed. It makes a lot more sense to nationalize it. But having it privately owned like it is now is crazy and the number one reason you see such inequality in wealth.
I don't disagree at all regarding nationalizing or in some other manner shifting the balance of power back towards the people. Maybe worth reading: http://en.wikipedia.org/wiki/Federal_Reserve_System#Balance_between_private_banks_and_responsibility_of_governments
My point of agreement with OP is that it was created, and has functioned at some critical points in our history, to actually help those hardest hit by economic downturns - and yes protect profits and line the pockets of the oligarchs too, but it has been a stabilizing force as often as not. I can't remember where I saw it but there was a statistic about frequency and impact of boom/bust cycles before and after the creation of the fed. Let's just say that the reality/history heavily favors Keynes over Hayek.
Look at Australia's central bank. It operate like a privet bank but all profits are deposited in the peoples account.
You have to keep a historical perspective. When the Fed was created the USA was still a non-militarized nation subject to intrusions and manipulation by European financiers. This is no longer the case. We can blow up London if they want to play dirty like that these days.
I won't dispute that the Fed can be a stabilizing agent and that is precisely why I favor nationalization over abolishing it. There is no reason to create a vacuum for oligarchs to continue to manipulate by abolishing the Fed.
Just remember that business cycles were worse before the Fed...Congress can rein in the Fed as much as it wishes to because Congress passed the Federal Reserve Act.
Congress has 0 authority over the FED. There two appointed board members that is it for government involvement.
Why do you feel that the business cycles were worse before the Fed, hebron?
I think some really basic info is helpful: http://www.swlearning.com/economics/gottheil/the_federal.html
There were numerous panics and other financial "events" in the 19th century that have been replaced with the more regular cycles we have now. The Fed has had several mishaps, i.e. 1929 was a doozy, but overall its control over the supply has been successful as have, but to a more debatable degree, its countercyclical monetary policies. Fiscal countercyclical policies are probably more important which, incidentally, is what Bernanke's asking for right now: http://money.cnn.com/2011/10/12/markets/stocks_federal_reserve/
It isn't "privately owned". That's just a derogatory way Ron Paul enthusiasts use to refer to it to confuse people that don't trust free-markets into thinking they are against it. It is composed of four components. One of which is composed of member banks which elect representatives in the regional federal reserve banks, which is composed of public and private representatives.
http://upload.wikimedia.org/wikipedia/commons/7/75/Organiztion_of_the_Federal_Reserve_System.jpg
Two gov appointed board members. The rest is privet and for profit.
Go to the link I provided,
http://upload.wikimedia.org/wikipedia/commons/7/75/Organiztion_of_the_Federal_Reserve_System.jpg
and don't reply to me until you're intelligent enough to count how many members of the fed are appointed.
corrected:( can you tell me where the profit goes?
In reply to your question, "The people who sit on..." What you seem to be describing is called Regulatory Capture, which is central to Economics of Regulation. This is probably one of the central themes of OWS. But there are 2 different takes on how to solve it. One is the Progressive view that if we increase transparency of both the organization's finances and the finances of members, but only to the extent that is necessary to avoid any conflicts of interest, effective regulation is possible. This is why Progressive politicians are more proned towards making appointments within the academic community rather than from the companies they intend to regulate. The second approach is from libertarians and conservatives that typically want to abolish the regulatory agencies (or defund them, or just appoint more private-sector cronies) assuming that free-market mechanisms will be sufficient enough to prevent monopolies, cartels, and negative externalities.
I'm all for establishing transparency in government agencies and cracking down on them when there is an apparent conflict of interest. In fact, transparency is one of the things Obama promised and has horribly failed to deliver. But I simply do not believe the fallacy that free markets can effectively regulate themselves.
Transparency seems to be need in many areas. As for the FED I'm not sure about what I would want. The whole idea of the fractional reserve system looks very unfair and inflationary to me. It puts banks at such an advantage when measured against other orgs in our system. It is no wonder they have been an issue for so many generations. I know that changing to another system is not even contemptible. I do understand the FED provides a needed service but I wonder why we gave up so much of the peoples power (currency creation). The way it got enacted is very suspect. Many say it is just another bank nothing special. I wonder why the most powerful players are all in when it's just another bank. What are the ways this institution can be and is abused. I think if that was laid out on the table. what is need would be a lot clearer.
The majority of it goes to the Treasury. A much smaller portion gets paid as dividends to the member banks. And the remainder after that goes into an account ledger called "equate surplus with paid-in capital"(or "surplus in paid-in", I forget) which is basically public-sector equivalent to retained earnings.
The people who sit on these high level boards are in the ultimate insider trading position? I know they can only get paid a fixed percentage from their success at the fed but what about their ability to play the system with advanced knowledge of feds controls and investments?
Profit actually goes back to the government.
Thanks just looked it up.
Or how about people simply go to the source? Here's the Federal Reserve Act of 1913 in it's entirety in pdf format (starts chapter 6 a couple paragraphs down the page): http://home.hiwaay.net/~becraft/FedResAct.pdf
Why not just go to the source, huh?? Oh, wait.. Because it was amended over 200 times which expanded congressional oversight and representation from government, that's why. So lets just all post links we found on partisan blogs that conveniently ignore the reforms that changed the fed in ways that don't conform to the conspiracy theories we've wasted so much of our lives reading about.
Fair enough, I was giving folks a starting point, and not trying to push debate for or against. Here's the amended act as it stands today: http://www.federalreserve.gov/aboutthefed/fract.htm
thank you sir...the Fed has its issues but the conspiracy theories need to be squashed.
http://www.youtube.com/watch?v=JMm1NAjeRFg&feature=youtube_gdata
Federal Reserve security guard admitting it is private property.
I don't know if you are lying or misinformed, but you need to fix whichever problem you are suffering from, TLydon.
That's not a guard, jackass. That's Alex Jones preaching that because he can't trespass, it must be private property. What Alex Jones says doesn't matter anyway, because he's not an American and has refused all my requests for him to show his birth certificate. Until he does, your video is trash.
My bad, I didn't even really look at the clip. It does show the the private property sign though. How you gonna explain that one? Here is the clip with the private security & police admitting it is private:
http://www.youtube.com/watch?v=hoPdBiuICSM&feature=youtube_gdata
Read this..
http://www.factcheck.org/2008/03/federal-reserve-bank-ownership/
The guard, while not being 100% incorrect, was probably doing the same exact thing as I would be doing if Alex Jones was pestering me with the same semantic games he uses to mislead his fans. I can't think of any government policy that can't be oversimplified, the way Alex Jones does, and used to arouse suspicion from people that don't know any better. If you disagree with the Federal Reserve system as it currently is, I have no objections to that. But if you oppose it because of the half-assed explanations from people like Alex Jones and Ron Paul, and Rick Perry you are either being deceived or they are because their explanations simply don't fool people that already understand it.
factcheck, isn't that a soros outfit? I'll stick with facts, thanks.
Oh and feel free to let me know when you come up with some nonsensical explanation for the "PRIVATE PROPERTY" signs on what you allege to be public property. LOL
Just to reiterate, why on earth do you people come here posting the fed isn't private when they post signs on their own property saying private property?
When is the last time you saw a private property sign on, say, the US Capitol? Seriously guys. Wake up.
It's amusing to recall that the originators of the movement that led to the Fed were salt of the earth Texans just like Ron Paul.
Read "Democratic Promise" by Lawrence GOodwyn
yeah, Ron Paul is admirable for his consistency and honesty, and yet he is so misguided in his faith in libertarian philosophy that he loses all sight of empiricism. I support some libertarian policies, but only because the empirical evidence backs up the case for their efficacy. I don't derive my policy beliefs from evidence-free philosophical assumptions (that's also known as religion)
Yeah, we need a centralized bank but it should not be the current Federal Reserve and shareholders. Do the research America is in a dangerous position with the FED and Friends. Why and the hell would you give a private central bank that operates unchecked in secret the ability to print a nations money at will. I don't care if you are liberal, moderate, or conservative you have to come together on this issue. Bernie Sanders and Ron Paul have fought to get this institution audited and there is a tremendous amount of stalling on the audits. We need a new nationalize centralized bank that operates in the treasury and answers to Congress. Why is america paying interest to have money printed that is their own money. That is nuts!!! There is a tremendous reason to be concerned especially right now.
(not sure why I can't respond on your original post so I am reposting and responding here)
"I'm hardly saying things are fine and dandy now but have some sense of proportionality about the frequency of banking crises pre-Fed and the level of income inequality and corporate oligarchy. you seem to misread the point of an elastic currency and how money demand behaves during a recession. Demand for goods in a recession goes down, but demand for money goes up! If the recession is deep enough, demand for money increases so much that self-fulfilling cycles of 'debt deflation' get set off, where declines in the price level lead to greater indebtedness, which weakens demand, which pushes the price level down further, etc. Episodes of debt deflation are not nice."
Already Bank of America is in trouble again only three years after the largest bail out in history. The frequency and magnitude of such crises leaves one wondering if the Fed is (or can) actually doing anything to monitor and prevent this form happening.
Demand for goods going down and money going up is two ends of the same seesaw and completely natural.
New debt has an inflationary effect - when someone borrows money to spend that has the effect of adding money into the market - like the last decade of too many people getting mortgages leading to record high housing prices.
In recessions, while interest rates rise, people payoff or default on loans leading to deflation as over all dept levels go down. When the Fed attempts to manipulate rates lower to stimulate new dept, you will see market oddities such as high dept and low prices - like our current housing market.
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I'm hardly saying things are fine and dandy now but have some sense of proportionality about the frequency of banking crises pre-Fed and the level of income inequality and corporate oligarchy. you seem to misread the point of an elastic currency and how money demand behaves during a recession. Demand for goods in a recession goes down, but demand for money goes up! If the recession is deep enough, demand for money increases so much that self-fulfilling cycles of 'debt deflation' get set off, where declines in the price level lead to greater indebtedness, which weakens demand, which pushes the price level down further, etc. Episodes of debt deflation are not nice.
If you refuse to pay taxes, the Gov may call out Marshall Law. We do not want to create a full out revolution..... I understand that many protestors are starting to get somewhat angry and many are getting hurt or arrested or both. I suggest that we take a different approach to make our point very clear. What is the true issue here???? Money!!! Right? We can get them all right where it hurts the most.... the pocket book! Thats what they have done to us for years. they steel our $. This is the true issue...... We can all get them from the comfort of our homes and noone is in jeapordy of getting hurt. We all must agree to do 2 things. 1) Take all our $ and investments out of the banks and 2) Stop paying all bank related liabilities. Morgages, (rents), Auto loans, Credit cards etc.etc.etc........ We need to literally take back all our $. If enough agree to do so, we could cripple the very institutions that created this mess. Everyone can go home and relax and sock away the cash.... control our cash and ultimately use it against them..... the federal gov could not allow this to happen. The demand is simple. NOT JOBS, ..... jobs are created naturally when billions of $'s isn't misused or stolen. A JOBS BILL IS JUST A POLITICAL PLOY. Our demand is COLD HARD CASH on an individual need basis.... A Simple process and minor eligability requirements designed by us... not them!
I don't think you realize you're just trying to start a bank run. The poor and the '99%' do not benefit from a bank run and an overall financial panic...rich oil billionaires than swoop in and buy up financial assets at deep discounts
What the end the fed(ders) believe the Rothchilds did by misinforming the British traders on who won the battle of Waterloo, so when therecwas a "panic" they bought up al f Britian at falling prices... Then,when the truth was discovered that Britian ad in fact won the Rothchilds were sitting pretty, correct?
You're either misinformed or deliberately trying to mislead people. The Fed is private. With the Federal Reserve Act of 1913, congress privatized the money supply in order to transfer wealth from the American people to the elite. We went from creating our own currency, interest free, to paying a private corporation fees and interest to do it. We need to nationalize our currency, abolish the Fed, and return the control of our money supply to the people. That is the system our founders created and it's still in our constitution.
You're either misinformed or deliberately trying to mislead people. The Fed is private. With the Federal Reserve Act of 1913, congress privatized the money supply in order to transfer wealth from the American people to the elite. We went from creating our own currency, interest free, to paying a private corporation fees and interest to do it. We need to nationalize our currency, abolish the Fed, and return the control of our money supply to the people. That is the system our founders created and it's still in our constitution.
I'll ignore the conspiracy theory undertones. What's your alternative and what empirical evidence do you have to back up your claim?
Theory? Is Wall St corruption a "theory"? This is no theory, it's fact. You can start with the Federal Reserve Act.
My alternative is to nationalize our currency, return control of it to congress, just as the constitution mandates.
that's still not a monetary system, the Constitution says "No State shall ...coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts"...are you suggesting a gold standard where the money supply is fixed to the supply of gold? be specific if you mean otherwise
I know what the constitution says. The states cannot conduct their business in anything but specie backed currency. The federal government has no such restrictions. The People are free to use any mediums of exchange they please - under our constitution which has been trashed since the privatization and legalized monopoly of our money supply.
I just quoted it so that we were on the same page. I'm glad you're not suggesting a gold standard (phew). But what monetary system are you supporting? give both the rationale and the evidence for why such a system would be superior to the basic central bank framework we (and every other country) uses
I support a gold standard. I'm only saying that the constitution doesn't prohibit the federal government from using something else. Under the constitution, the states do not have that option.
I'm sorry that I do not have the time nor inclination to get into a deep discussion on this subject. It just requires study. A good place to start is with Roger Sherman, one of the founders and the one who was responsible for Article One, Sec 10. The founders were geniuses. Their decisions on the matter of our currency were born of experience with many forms of currency, along with insane inflation, prior to the penning of the constitution.
This is just two pages but it's very educational and a start on learning where the founders were coming from:
A Caveat Against Injustice
http://www.rogershermansociety.org/caveat.htm
This is to Bankster. For some reason the reply option is not showing below your post.
I cannot believe you brought up Tupper!!! He's the one who is responsible for my learning the truth! The Miracle on Main Street nearly caused a revolution in Michigan, and I used his tactics with my local city government and won! I think we need to get copies of MoM and pass them out at every Occupy location. It's quick and easy reading and it totally explains the money issue. If OWS learned what he wrote in that book, this thing would EXPLODE!!!
Yeah! Roger Sherman was THE man! as I first read about in F. Tupper Saussy's best-selling book of: "The Miracle on Main Street" back in the early 1980s along with his monthly The "Main Street Journal". http://www.tuppersaussy.com/ Who here is in New Hampshire? WHERE is "our" event? today: Sat., Oct. 15th. Boston at The Fed? Why not some in-direct protests at some of their member banks like TD BANK?
Here you go. Educate yourself:
http://video.google.com/videoplay?docid=6507136891691870450
You would do well to lose the condescending tone. I'm willing to admit I'm wrong if you present me with robust empirical evidence that points to a view opposing to my current view. I hope you can say the same for yourself. If we are going to suggest educational resources, I think you should start with Friedman and Schwartz' "A Monetary History of the United States"
I was not being condescending. I see educating oneself and the encouragement to do so as positive. I, too, had to learn and I have studied the Fed since 1980.
I will look up the book you've suggested. For a comprehensive history of the Fed and banking I recommend The Creature From Jekyll Island. On the matter of nationalizing our currency, I recommend Ron Paul's, End The Fed.
Hebron: If not the Fed, then what else? Which is a very good question.
Two versions I've heard of what to do after ending the Fed that make a modicrum of sense to me:
1) Government takes control of the centralized banking system and the printing of currency as outlined in the Constitution, and how it was before the formation of the Fed in 1913 or a similar system. This view is supported and outlined straight and to the point by Dennis Kucinich in an address to the House of Representatives: http://www.youtube.com/watch?v=wjL108wA9QU
2) Disband centralized banking. Instead of the government running any banks, banks will be fully privatized. The Fed holds so much power and sway and abuses it for it's members, as it's a centralized banking system that is THEN privitized into it's shares, power still masses to the central overhead system. A fully privitized non-central system would allow banks to compete, and allow for consumers to pick which bank and banking system they wish, and indeed which currency they prefer if applicable (banks could also choose what their currency is based off of- whether gold, silver, seashells, or mickey mouse bucks whatever, in theory a commodoty might also be more conceptual (well, money IS conceptual) such as information trading or job hours, and if they base their currency on a commodity the consumer doesn't trust then the consumer does not have to bank with that bank and has others to choose from, it also allows for more people to start banks should they wish). This model would basically be what Panama has: http://mises.org/daily/2533
Kucinich's argument (and yes I chose him intentionally to show a non-Libertarian and anti-Austrian-economics politician arguing to disband the Fed as well . . . sick of people thinking it's only a Libertarian idea :p ) in that link for ending the Fed makes sense to me, as do most Libertarian's arguments as for why, among others (including Ron Paul- as far as seeing political figures argue the point, Paul and Kucinich are probably the two main guys to research on the topic, outside of political figures there's a ton of resources on the topic if web search) .
So, Kucinich gives an argument for what happens after, and Panama has shown the reverse works too (a system of non-centralized banks). Loosely these 2 solutions represented here can be categorized as:
Idea #1 is government control of the financial system with the government as the only bank in town so to speak (this is gross simplification I know). If needed, the government can print more money to pay it's debts. The government has more direct control of the economy in theory and can pump money into, say, the nation's infrastructure, health care, education, where ever else it wishes etc, to create jobs and improve quality of life.
Idea #2 is separation of State and the financial system and also separation of the financial system itself (no power massing around a central bank and no ties between government and a central bank which makes a bank that can write legislation in it's favour- a rigged system).
Why end the Fed? For starters, the Fed owns the banks we're protesting against, so if that's enough for anyone to think it's worthy looking into then they should.
But I'm not going to argue for or against in this thread, there's many other threads that give whys and you were asking for what could replace the Fed. I will offer some things to help in further discussions with anyone about it that might be helpful. There's more ideas of what to replace the Fed with too than just the two I provided above.
Here's the 1913 Federal Reserve Act, it's the actual bill that formed the Fed: http://home.hiwaay.net/%7Ebecraft/FedResAct.pdf
So, when people talk about the Fed or refer to the Federal Reserve Act, that document is a reference point one can use.
Here is the Congressional Record for the day of Dec 23rd, 1913 when the act was passed through Congress, with arguments pro and con: http://www.scribd.com/doc/17234309/Congressional-Record-Dec-23-1913
The Congressional Record shows some of the debate from near 100 years ago and the speeches made on the Senate floor that day (plenty of accusation of screwing people over for wealth, seems that hasn't changed much at all :p Note also, a little over half the Senate at the time was attending, plus it's 1913 and despite no television or even news radio it's quite dramatic- so at least it's not an entirely boring read)
EDIT: Here's the Federal Reserve Act as it stands today: http://www.federalreserve.gov/aboutthefed/fract.htm
Excellent post with great links, especially the congressional record. The FR Act was another piece of legislation rammed through while the people were busy with Christmas and distracted, including legislators.There are numerous pro bankster shills all over the board posting inaccurate information so informative links really help to counter their little disinfo campaign.
Here's the Federal Reserve Act as it stands today: http://www.federalreserve.gov/aboutthefed/fract.htm
I really should have included this right away ;)
Many more people will come to your side when you are proactive (for “new” Business & Government solutions), instead of reactive (against “old” Business & Government solutions), which is why what we most immediately need is a comprehensive “new” strategy that implements all our various socioeconomic demands at the same time, regardless of party, and although I'm all in favor of taking down today's ineffective and inefficient Top 10% Management System of Business & Government, there's only one way to do it – by fighting bankers as bankers ourselves; that is, using a Focused Direct Democracy organized according to our current Occupations & Generations. Consequently, I have posted a 1-page Summary of the Strategically Weighted Policies, Organizational Operating Structures, and Tactical Investment Procedures necessary to do this at:
http://getsatisfaction.com/americanselect/topics/on_strategic_legal_policy_organizational_operational_structures_tactical_investment_procedures
Join
http://finance.groups.yahoo.com/group/StrategicInternationalSystems/
because we need 100,000 “support clicks” at AmericansElect.org to support a Presidential Candidate -- such as any given political opportunist you'd like to draft -- in support of the above bank-focused platform.
Most importantly, remember, as cited in the first link above, that as Bank Owner-Voters in your 1 of 48 "new" Business Investment Groups (or "new" Congressional Committees) you become the "new" Congress replacing the "old" Congress according to your current Occupation & Generation, called a Focused Direct Democracy.
Therefore, any Candidate (or Leader) therein, regardless of party, is a straw man, a puppet; it's the STRATEGY – the sequence of steps – that the people organize themselves under, in Military Internet Formation of their Individual Purchasing & Group Investment Power, that's important. In this, sequence is key.
Why? Because there are Natural Social Laws – in mathematical sequence – that are just like Natural Physical Laws, such as the Law of Gravity. You must follow those Natural Social Laws or the result will be Injustice, War, etc.
The FIRST step in Natural Social Law is to CONTROL the Banks as Bank Owner-Voters. If you do not, you will inevitably be UNJUSTLY EXPLOITED by the Top 10% Management Group of Business & Government who have a Legitimate Profit Motive, just like you, to do so.
Consequently, you have no choice but to become Candidates (or Leaders) yourselves as Bank Owner-Voters according to your current Occupation & Generation.
So please JOIN the 2nd link so we can make our support clicks at AmericansElect.org when called for, at exactly the right time, by an e-mail from that group, in support of the above the bank-focused platform in the 1st link. If so, then you will see and feel how your goals can be accomplished within the above strategy as a “new” Candidate (or Leader) of your Occupation & Generation.
I was hoping to engage in thoughtful discussion...but at least this spam-like post keeps my discussion thread at the top of the list (now I feel all disgusting inside)
First, everyone has the right to reply -- once -- to a new thread, and then again to anyone who responds therein again. That's called free speech; to do otherwise is to walk down the slippery slope toward dictatorship. Is dictatorship what you really want?
Second, put yourself in my shoes, it's very tough when you need to get 100,000 people to join a group web site so that, at exactly the right time, you can email them to give 100,000 support clicks at AmericansElect.org in support of the above bank-focused platform. As such, OWS can't be about mere words, like so MANY groups in the past have been. It has to be about ACTIONS.
I didn't mean it in an overly negative way...chill. You have the right to post, it was merely a tongue-in-cheek remark And I don't want a dictatorship in case you thought otherwise
No offense taken, and I'm sorry about the mechanics of seeking support. Nevertheless, I hope you'll join the group in the 2nd link cited so that we can further empower ourselves, for there are always long-term alternatives to short-term problems, if we know where to find each other, right?