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Dirty Secrets of the Temple
By Stephen Lendman (about the author) Page 3 of 5 page(s)
Lincoln also appears to have said (although some dispute it): "I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country.....corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed." Imagine what Lincoln might say today.
Given Lincoln's sentiment about the bankers and money power of the country, it would seem to beg the obvious question: did it play a role in, or was it the reason for, his untimely death at the hands of John Wilkes Booth? The international bankers clearly disliked Lincoln after he managed to get the Congress to pass the Legal Tender Act in 1862 that empowered the US Treasury to issue paper money called "greenbacks." Lincoln needed this legislation after he declined to pay the bankers the usurious 24 - 36% interest rates they demanded on the loans he needed to fund his war with the South. With the new banking law, Lincoln was then able to print up the millions of dollars he needed which was debt and interest free. Clearly this was not what the greedy bankers wanted as they can only profit when they get their pound of flesh from financial transactions they control. Right after the war ended Lincoln was assassinated, and shortly thereafter the so-called Greenback law was rescinded, a new national banking act was passed, and all money became interesting-bearing again.
How the Federal Reserve System Works
The Federal Reserve System is the result of the Congress and President having agreed to privatize the nation's money system and relinquish the power that should have remained the government's exclusive right. That act was so outrageous the Fed had to be deliberately designed to look like a branch of the federal government to hide the fact that it's really an all-powerful privately owned banking cartel whose member banks (including all the national ones) share in the vast profits earned from having the most important of all franchises governments alone should have - the right to print money in any amount, control its supply and price, and benefit hugely by loaning it out for a profit including to the government itself that must pay interest on the money it should never have to if it simply printed its own. Think of what happened as the government having legalized the right to counterfeit the national currency for private gain. It's no exaggeration to claim this is the greatest ever of all financial scams causing incomprehensible harm with the public none the wiser. Here's how it works in simple terms:
The Fed was given the authority to conduct the nation's monetary policy with the power to control the supply and price of money. It has three ways to do it - through open market operations, the discount rate it charges member banks, and the reserve requirement percentage of member banks assets it requires them to hold and not loan out. The Board of Governors is responsible for handling the discount rate and reserve requirements while the Federal Open Market Committee (FOMC) is in charge of the open market operations of buying or selling bonds explained further below. Using these tools, the Fed is able to influence the supply and demand for money and thus directly control the federal funds short-term rate that's always fixed unless the Fed wishes to raise or lower it. Longer rates are controlled by the powerful institutional traders in the bond market.
The FOMC and How It Works
The Federal Open Market Committee is really key to the whole process of money creation or contraction. It consists of 12 members - seven members of the Board of Fed Governors, the president of the New York Fed Bank (the most important one of all) and four of the remaining 11 Reserve Bank presidents who serve one year terms on a rotating basis. The FOMC holds eight regularly scheduled meetings a year to assess economic conditions and decide how loose or tight it wants monetary policy to be to further its stated goal of sustainable economic growth and price stability.
The FOMC literally has the power to create money out of nothing. It does it in a four step process:
Step 1 - The FOMC first approves the purchase of US government bonds on the open market.
Step 2 - The New York Fed bank buys them from sellers (financial markets always have an equal number of buyers and sellers).
Step 3 - The Fed pays for its purchases with electronic credits to the sellers' banks, which, in turn, credit the sellers' bank accounts. These credits are literally created out of nothing.
Step 4 - The banks receiving the credits can then use them as reserves to enable them to loan out as much as 10 times their amount (if their reserve requirement is 10%) through the magic (only banks have) of fractional reserve banking and, of course, collect interest on all of it. What a business, and it's all legal. Imagine how rich we might all be if we as private individuals could do the same thing. Borrow a million from the Fed and like magic it becomes 10 times as much, and we get to collect interest on all but the 10% of it we must hold in reserve. This is the magic of fractional reserve banking money creation and explains how powerful an economic stimulus it is when the Fed wants to enhance economic growth.
When the Fed wishes to contract the economy by reducing the money supply, it simply reverses the above process. Instead of buying bonds, it sells them so that money moves out of the buyers' bank accounts instead of into them. Bank loans must then be reduced by 10 times if the reserve requirement is 10%.
How the Fed Harms the Public Interest
The Federal Reserve System exists only to serve its owners and member banks and in doing so is hostile to the public interest. That's because it's a banking cartel with the power to restrict competition for greater profits gained at our expense. It goes from our pockets to theirs, and the public loses in at least four ways:
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