imp3ratrix: (Vain wisdom all and false philosophy)
[personal profile] imp3ratrix
I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that grow up around them will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.

~ Thomas Jefferson

Letter to Secretary of the Treasury Albert Gallatin; 1802


Date: 2010-03-09 03:19 pm (UTC)
From: [identity profile]
I am kind of conflicted over this.

Date: 2010-03-10 07:19 am (UTC)
From: [identity profile]
Oh, contention! Would this be against what Jefferson said or to end the Federal Reserve? Either way, I'd like to hear your opinion.

Date: 2010-03-10 07:31 am (UTC)
From: [identity profile]
A bit of both? Haha it's too hot to think right now but if the power to issue currency was "returned to the people", I'd be kind of scared. I mean, what if many of them decided that we can just keep printing money and we'll have hyperinflation? Or something like that.

And anyway, even if the central banks were abolished, I think we'd still need institutions and well, with something as important as money and with the inequalities in the level of education of the general populace, I'd expect the iron law of oligarchy to end up coming to pass eventually.

Date: 2010-03-10 01:26 pm (UTC)
From: [identity profile]
Ah, that's a valid assumption. Though I hope you don't mind if I respond, and in my very long, detailed way as is probably custom by now. :P

I do believe a return "to the people" in this sense implies direct government regulation. The problem with the Federal Reserve, being an independent entity operating within but not a part of government, is that it does not have to answer to any legislative body, in particular as to the bedrock specifics of its programs, dealings and assets. You can see this in a number of Senate Budget Committee hearings wherein Ben Bernanke, in one example, refuses to name the central banks who were recipients of large loans and credit handouts that often range in the trillions.

And this is where things get really messy. Article 1, Section 8 of the Constitution essentially states that only Congress is allowed to create and regulate the value of money. Furthermore, the Supreme Court ruled in 1935 that Congress cannot constitutionally delegate its power to another entity. Now, not only is the Fed an illegal agency under the Constitution and a Supreme Court ruling, but has been printing endless lines of credit since its inception. And with more money floating around, it's probably no wonder that the value of the US dollar has continued to fall annually (despite the economic bubble during the 50's, 60's and early 70's), and is now wroth about 92% less than what it did in 1913 (when the Federal Reserve Act was passed).

1971 must have been Christmas as all ties between the dollar and the gold standard were severed, and the creation of money literally out of nothing ran rampant. This is where your hyperinflation can indeed become a reality, if current economic trends are anything to go by. But this too is the eventual norm of all fiat currencies, and trust in the dollar, especially when pitted against the euro for instance, is certainly on a gradual decline. I won't be surprised if sometime in the near future confidence shatters completely and it does indeed become worthless paper (though talks of creating a North American Union and a new common currency is certainly interesting given this fact).

Now, as for what Jefferson hypothesised, it has indeed become the natural state of affairs. For instance, when government runs a deficit, the Fed prints money through the Treasury at no cost, buys the debt, and the money is circulated into the economy. It then charges the tax payer interest on that money it created at virtually no expense (each note, regardless of its value, costs them about 50-70 cents). The credit crunch in the Sates has created some $34 trillion in domestic non-financial debt, virtually unpayable, to which fault can be placed with the Fed. Furthermore, it lends tax payer dollars to global central banks at virtually no interest. They then lend it to the public and charge interest on it at about a minimum of 30%, thereby profiting exponentially whilst the average individual suffers. If you can't pay, the bank takes your home. If you don't pay your taxes to the IRS, you're taken to court and your assets seized.

This is really incredible when you consider that the Fed is independent of government, and essentially a bank itself. It's actual creation was orchestrated not by a legislative body, but by several of the world's leading bankers. It is, regardless of what its board says, a borderline private entity interested in building profit for its central bank shareholders (and not publicly traded shares mind you) and making Wall Street richer. I agree, of course, that institutions are needed. But those institutions need to be regulated via a strict implementation of rules and provisions by government as to what they can and cannot do. As for the Fed, first and foremost it needs to be audited (it hasn't been since its creation in 1913. Unacceptable!) and there are Bills currently in Congress wishing to do just that. If it's not to be replaced by a State controlled bureaucracy, then more control by Congress over its actions, as well as transparency and complete availability of its books, assets etc (also a Bill in Congress), needs to happen so that it may not continue with its corrupt, shady practices.


Date: 2010-03-10 01:27 pm (UTC)
From: [identity profile]
At any rate, this all illustrates just how the global elite control not only the monetary system at large, but extend that control to states themselves, all to further their own power and wealth, at the expense of the populace. Such a fact is always assumed, but seeing the extent of its real time application is unsettling to say the least.

I hope most of this made sense, if you ended up reading it, haha. But I must say I rather enjoyed myself (as is evident by the length XD). Discussing political affairs is a far more exciting and fruitful endeavour than that other tripe we waste our time with (ie. GG).

Date: 2010-03-10 05:27 pm (UTC)
From: [identity profile]
Ha, when I read that quote I thought it meant a direct democracy, which wasn't very comforting! I do understand where you're coming from. My concern with the government directly overseeing monetary policy, though, is that if it would be subjected to filibustering and partisanship, and then nothing would get done. Which is better, or not much worse, than doing something badly, but still. And if officials want to get re-elected, they might want to give the public what they want monetary policy-wise even if a painful decision now would be yield better benefits in the long run.

But yeah, I do agree that the Fed needs to be made even more transparent and accountable. Make people understand what they're trying to do and have mechanisms for changing poorly-performing officials, maybe not using an election process where they're aware of their expiration dates and might push for public-friendly short-term policies to stay in their positions.

(And about the gold standard... I'd rather the central bank be flexible on its monetary policy than to have that depend on gold production. Which, okay, is kinda contradictory to what I just said about how people would just print money if they feel like it, but I did think that people literally meant the rest of the country.)

I'm confused about the powers of the Congress though. So by creating the Fed, the Congress themselves did something illegal? It's just weird that the Supreme Court hadn't ruled on the illegality of the Fed as early as then--and that Congress hasn't regained monetary control in almost a century.


Date: 2010-03-20 03:01 pm (UTC)
From: [identity profile]
I have been so out of it this week I completely forgot to reply to this! ><

I understand your concerns. Though I am inclined to believe the safer choice lies with 'elected' officials that can be held accountable for their actions, rather than a private group of bankers whose sole interest is profit. Such motivation is dangerous on a national front.

Definitely! More transparency and perhaps even limited authority. Congress ought to have a more firm, active involvement in financial affairs if only to ensure a means of checks and balances, which is sorely missing at the moment as the Fed seems to think it can do whatever it damn well wants. New measures would work so far as the administration in power would be willing to implement them. If the lobby groups who bankroll a majority of politicians' campaigns are the very people invested in the status-quo, then very little will change. Case in point Obama, whose entire administration is in bed with Wall Street.

It's actually quite interesting how the Federal Reserve Bill came to be legislated. The idea of a centralised bank was quite vehemently opposed by the majority of congress, and the bill itself lacked the support needed to pass. And so Nelson Aldrich, who was at the forefront campaigning for the Fed, included the bill among others just before Christmas when Congress was scheduled to take leave. The time frame made it impossible for many to see the bill in its entirety, and so it was passed (with great surprise emerging later on as to the details contained within it). It is here that I should mention that Nelson Aldrich held a very close relationship to J.P. Morgan, and whose daughter was married to John D. Rockefeller Jr., who held ties with the Chase National Bank, then Chase Manhattan Bank.

Ultimately, Congress can pass anything if there's a majority vote. It is then up to the Courts to decide whether that piece of legislation is Constitutionally binding or not. Though with most cases, it comes down to a matter enforceability and or willingness. Yes, the Federal Reserve Bill is illegal under the Constitution. Yes, the courts stated Congress can't defer its powers, but a willingness to act in an appropriate fashion and to enforce the rule doesn't exist. Politicians don't want to act contrarily to the interests of those who got them to power lest they lose their funding and their seat, and similarly judges do not want to open that can of worms and put their own careers at risk. So speaks the stranglehold private interest groups have on modern government. No one is going to do anything.

Well, I should say that's a good thing! Inspiring intellectual stimulation on a substantive topic should not be viewed as being mutually exclusive with livejournal! We should do this more often if anything.


imp3ratrix: (Default)
Mock on, mock on, Voltaire, Rousseau.

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