Are there conspiracies? Julius Caesar came to power in a conspiracy. So did Augustus and Hitler. Some conspiracies are good. America was born in conspiracy. The Founding Fathers certainly didn't invite the British to Philadelphia while plotting secession.
What about the Federal Reserve, the supposedly nefarious bank that plots America's ruin. For conspiracy buffs, I hate to disappoint you, but if the Federal Reserve is a conspiracy, it's a good one.
The Fed's surrounded by myths because people dislike banks. This has been such since our Republic's inception. It's ironic then that Lincoln and Washington believed in having a bank like the Fed.
Yet, myths and suppositions persist. Here are some of the myths countered by some real facts:
1. Myth) The Fed's a private bank. Fact) The Fed's basically a government institution designed to look like a private bank. This is because the people of 1913 didn't want a central bank, clinging to Andrew Jackson's hatred of them. ( Jackson was almost sent to debtors' prison because he had to honor bad bank notes he spent. Do you think maybe he had a private motive.)
So in 1913, the government sold the people on the idea of 12 private banks to control the money. Except it was a central bank. Now Conspiracy buffs want a national bank. Well they have it. The disguise is so good that they think the Fed's a private bank.
2. Myth) The Fed makes money off the Government. Fact) All money earned by the Federal Reserve, including the interest on the debt is refunded back to the government. The “ private banks” that make up the Fed do own stock in it, but the stocks have no ownership quality because they act as bonds paying a 6% return. This is paid to the banks because though the government had ¾ 's of the world's gold in 1913, it didn't want to start a central bank with its own money. It took a forced loan in gold and gave the member banks of the Fed a small profit. The other 94 % of the profit is paid to Uncle Sam. The government makes money on the Fed. A final note here. The “stocks” can only be owned by Americans and can not be traded.
3. Myth) The Fed prints money. Fact) All money must be issued against securities, gold or something of value. Isn't it true that some of these securities are government bonds which the government creates? So. The last time I checked everyone accepts government bonds, assuming a Congress and the President won't spend the U.S. into bankruptcy. The bonds after all represents your future productivity. Now this isn't to say that currency isn't created but that doesn't mean money's just printed. It's just an exchange, again, of your future productivity turned into something that's more liquid, currency. If the government's run by decent men and women, it refunds you back the productivity (money), or better still, never has to even take that productivity in higher taxes because the economy's current productivity expands, devouring inflation and turning extra currency issued into real money backed by productivity.
Does that mean everything's great. No. It's an unbridled government which is the problem today, the same government conspiratorialists want it to control the money. Bonds have to be backed by your productivity. And if a government spending's unsound, while it may not pay the interest, you will in the form of inflation, unemployment, recession, depression and/or higher taxes. No one gets a cocktail on a sinking ship.
Remember, the Fed doesn't loan the government money, the government borrows it.
By
3. Myth) The Fed prints money. Fact) All money must be issued against securities, gold or something of value. Isn't it true that some of these securities are government bonds which the government creates? So. The last time I checked everyone accepts government bonds, assuming a Congress and the President won't spend the U.S. into bankruptcy. The bonds after all represents your future productivity. Now this isn't to say that currency isn't created but that doesn't mean money's just printed. It's just an exchange, again, of your future productivity turned into something that's more liquid, currency. If the government's run by decent men and women, it refunds you back the productivity (money), or better still, never has to even take that productivity in higher taxes because the economy's current productivity expands, devouring inflation and turning extra currency issued into real money backed by productivity.
Does that mean everything's great. No. It's an unbridled government which is the problem today, the same government conspiratorialists want it to control the money. Bonds have to be backed by your productivity. And if a government spending's unsound, while it may not pay the interest, you will in the form of inflation, unemployment, recession, depression and/or higher taxes. No one gets a cocktail on a sinking ship.
Remember, the Fed doesn't loan the government money, the government borrows it.
By
Jeffrey Ruzicka
Jeffrey Ruzicka is a retired executive of a small company that specializes in industrial water treatment. He lives happily with his wife in Western Pennsylvania and is a contributing writer toFinancialJobBank, FinancialJobBankBlog and Nexxt.
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