Federal Reserve Bank Quotes

It is no coincidence that the century of total war coincided with the century of central banking.

I feel robbing a bank would be the highest form of performance art. No need to pay to see me work. The Federal Reserve is subsidizing it.

I will feel no guilt on shutting my door to those who didn't listen.

Money is not an invention of the state. It is not the product of a legislative act. Even the sanction of political authority is not necessary for its existence. Certain commodities came to be money quite naturally, as the result of economic relationships that were independent of the power of the state.

This [Federal Reserve Act] establishes the most gigantic trust on earth. When the President (Woodrow Wilson) signs this bill, the invisible government of the monetary power will be legalized....the worst legislative crime of the ages is perpetrated by this banking and currency bill.

I was reading in the paper today that Congress wants to replace the dollar bill with a coin. They’ve already done it. It’s called a nickel.

Capitalism is Altruistic, and it requires a certain altruism of each of us.

If the American people ever allow the banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers occupied. The issuing power of money should be taken from the banks and restored to Congress and the people to whom it belongs. I sincerely believe the banking institutions are more dangerous to liberty than standing armies.(1)

You have to include inflation in your annual revenue and expense forecasts. You have to treat inflation as an annual fee your business pays into the economy. If inflation is 2% for example, that means the economy is charging your business a 2% annual fee and so you gotta make sure your income and total assets grow at minimum 2% annually just to keep up.

Von Pein’s family was a little known, but highly influential entity within American banking circles. Banking Royalty, some called it. His grandfather had been one of the chief orchestrators of the Federal Reserve Act of 1913, which effectively took ownership of the bank from the American people.

The Federal Reserve system is unlike any other in the world; it is a crazy genetic mashup of different animals, part private bank and part government agency.

fictional entities as the dollar, the Federal Reserve Bank, and the totemic trademarks of corporations.

The Federal Reserve bank protected them at our expense: when “conservative” bankers make profits, they get the benefits; when they are hurt, we pay the costs.

The accepted version of history is that the Federal Reserve was created to stabilize our economy. One of the most widely-used textbooks on this subject says: "It sprang from the panic of 1907, with its alarming epidemic of bank failures: the country was fed up once and for all with the anarchy of unstable private banking."23 Even the most naive student must sense a grave contradiction between this cherished view and the System's actual performance. Since its inception, it has presided over the crashes of 1921 and 1929; the Great Depression of '29 to '39; recessions in '53, '57, '69, '75, and '81; a stock market "Black Monday" in '87; and a 1000% inflation which has destroyed 90% of the dollar's purchasing power.24

Recent Federal Reserve Bank of Chicago research has found, with a granular level of detail down to the city block, that the refusal to lend to Black families under the original 1930s redlining maps is responsible for as much as half of the current disparities between Black and white homeownership and for the gaps between the housing values of Black and white homes in those communities. Richard Rothstein, author of the seminal book on segregation, Color of Law: How the Government Segregated America, reminds us that there is no such thing as “de facto” segregation that is different from de jure (or legal) segregation. All segregation is the result of public policy, past and present.

By loaning banks money for no interest, you’re really letting them into the casinos with the house’s money, aren’t you?

A brick could be used to help America make money. Trust me, this is smarter than letting a central bank like the Federal Reserve make all the money.


Intellectually and compassionately explaining the reason freedom works is required for credibility.

The circular which was distributed to attract subscribers to the Bank's initial stock offering explained: "The Bank hath benefit of interest on all the moneys which it, the Bank, creates out of nothing.

A prohibition on the hoarding or possession of gold was integral to the plan to devalue the dollar against gold and get people spending again. Against this background, FDR issued Executive Order 6102 on April 5, 1933, one of the most extraordinary executive orders in U.S. history. The blunt language over the signature of Franklin Delano Roosevelt speaks for itself: I, Franklin D. Roosevelt . . . declare that [a] national emergency still continues to exist and . . . do hereby prohibit the hoarding of gold coin, gold bullion, and gold certificates within the . . . United States by individuals, partnerships, associations and corporations.... All persons are hereby required to deliver, on or before May 1, 1933, to a Federal reserve bank . . . or to any member of the Federal Reserve System all gold coin, gold bullion and gold certificates now owned by them.... Whoever willfully violates any provision of this Executive Order . . . may be fined not more than $10,000 or . . . may be imprisoned for not more than ten years. The people of the United States were being ordered to surrender their gold to the government and were offered paper money at the exchange rate of $20.67 per ounce. Some relatively minor exceptions were made for dentists, jewelers and others who made “legitimate and customary” use of gold in their industry or art. Citizens were allowed to keep $100 worth of gold, about five ounces at 1933 prices, and gold in the form of rare coins. The $10,000 fine proposed in 1933 for those who continued to hoard gold in violation of the president’s order is equivalent to over $165,000 in today’s money, an extraordinarily large statutory fine. Roosevelt followed up with a

For the US to be like Russia today,” he wrote, “it would be necessary to have massive corruption by the majority of members of Congress as well as by the Departments of Justice and Treasury, and agents of the FBI, CIA, DIA, IRS, Marshall Service, Border Patrol, state and local police officers, the Federal Reserve Bank, Supreme Court justices, US district court judges, support of the varied organized crime families, the leadership of the Fortune 500 companies, at least half of the banks in the US, and the New York Stock Exchange.

Behind the troubled banks and the increasingly troubled insurance agencies stands "the full faith and credit" of the Government—in effect, a promise, sure to be honored by Congress, that all citizens will chip in through taxes or through inflation to make all depositors whole.80

Trade may seem a very pragmatic activity, one that needs no fictive basis. Yet the fact is that no animal other than Sapiens engages in trade, and all the Sapiens trade networks about which we have detailed evidence were based on fictions. Trade cannot exist without trust, and it is very difficult to trust strangers. The global trade network of today is based on our trust in such fictional entities as the dollar, the Federal Reserve Bank, and the totemic trademarks of corporations. When two strangers in a tribal society want to trade, they will often establish trust by appealing to a common god, mythical ancestor or totem animal.

The only solution was to tie the hands of macroeconomic policy makers.7 Instead of giving the Federal Reserve discretion to trade lower unemployment for higher inflation, the central bank should be forced to accept the fact that a certain amount of unemployment was necessary to keep inflation stable. As we will see, MMT contests this framework.

1836: Following his years of fighting against the Rothschilds’ and their central bank in America, President Andrew Jackson finally succeeds in throwing the Rothschilds’ central bank out of America, when the bank’s charter is not renewed. It would not be until 1913 that the Rothschilds’ would be able to set up their third central bank in America, the Federal Reserve.

What is the attraction of central bankers to issuing their own digital currencies? The answer lies in wider access to second-layer money. Recall that the Federal Reserve issues two types of money, wholesale reserves for private sector banks and retail cash for people. In order to provide monetary stimulus, the Fed issues reserves and hopes that private sector banks will use those reserves to circulate third-layer deposits into the economy by lending money. With a CBDC, the Fed could issue second-layer money directly to people in the form of digital helicopter money; the phrase “helicopter money” comes from Milton Friedman, who in 1969 provided the imagery of dropping cash out of a helicopter in order to stimulate economic demand.

the first century of the US Federal Reserve’s existence has been a failure. Not only has there been incontinent inflation since 1913, the year the Fed came into existence (8 per cent in the preceding 120 years, 2,300 per cent in the succeeding hundred years), but there has been devastating deflation too, and more banking panics, more financial volatility, longer and deeper recessions.

If all the bank loans were paid, no one could have a bank deposit, and there would not be a dollar of coin or currency in circulation. This is a staggering thought. We are completely dependent on the commercial Banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon.”   Robert H Hemphill, credit manager of Federal Reserve Bank of Atlanta, 1934

A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the Nation, therefore, and all our activities are in the hands of a few men ♦ ♦ *, We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilised world — no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of small groups of dominant men.

And so, as the passengers drifted off to sleep to the rhythmic clicking of steel wheels against rail, little did they dream that, riding in the car at the end of their train, were six men who represented an estimated one-fourth of the total wealth of the entire world. This was the roster of the Aldrich car that night: Nelson W. Aldrich, Republican "whip" in the Senate, Chairman of the National Monetary Commission, business associate of J.P. Morgan, father-in-law to John D. Rockefeller, Jr.; Abraham Piatt Andrew, Assistant Secretary of the U.S. Treasury; Frank A. Vanderlip, president of the National City Bank of New York, the most powerful of the banks at that time, representing William Rockefeller and the international investment banking house of Kuhn, Loeb & Company; Henry P. Davison, senior partner of the J.P. Morgan Company; Benjamin Strong, head of J.P. Morgan's Bankers Trust Company;1 6. Paul M. Warburg, a partner in Kuhn, Loeb & Company, a representative of the Rothschild banking dynasty in England and France, and brother to Max Warburg who was head of the Warburg banking consortium in Germany and the Netherlands.2

the first century of the US Federal Reserve’s existence has been a failure. Not only has there been incontinent inflation since 1913, the year the Fed came into existence (8 per cent in the preceding 120 years, 2,300 per cent in the succeeding hundred years), but there has been devastating deflation too, and more banking panics, more financial volatility, longer and deeper recessions. Even the Fed’s response to the crisis of 2008 has come under severe criticism, as it effectively bailed out bad assets while doing little to help solvent institutions with needed liquidity

The difference gave China a $420 billion trade surplus (the US carried the opposite, a $420 billion trade deficit with China). Americans paid for those goods with US dollars, and those payments were credited to China’s bank account at the Federal Reserve. Like any other holder of US dollars, China has the option to sit on those dollars or use them to buy something else. Uncle Sam doesn’t pay interest on the dollars China keeps in its checking account at the Fed, so China usually prefers to move them into what is effectively a savings account at the Fed. It does this by purchasing US Treasuries. “Borrowing from China” involves nothing more than an accounting adjustment, whereby the Federal Reserve subtracts numbers from China’s reserve account (checking) and adds numbers to its securities account (savings). It’s still just sitting on its US dollars, but now China is holding yellow dollars instead of green dollars. To pay back China, the Fed simply reverses the accounting entries, marking down the number in its securities account and marking up the number in its reserve account. It’s all accomplished using nothing more than a keyboard at the New York Federal Reserve Bank.

The biggest fear for homeschooled children is that they will be unable to relate to their peers, will not have friends, or that they will otherwise be unable to interact with people in a normal way. Consider this: How many of your daily interactions with people are solely with people of your own birth year?  We’re not considering interactions with people who are a year or two older or a year or two younger, but specifically people who were born within a few months of your birthday. In society, it would be very odd to section people at work by their birth year and allow you to interact only with persons your same age. This artificial constraint would limit your understanding of people and society across a broader range of ages. In traditional schools, children are placed in grades artificially constrained by the child’s birth date and an arbitrary cut-off day on a school calendar. Every student is taught the same thing as everyone else of the same age primarily because it is a convenient way to manage a large number of students. Students are not grouped that way because there is any inherent special socialization that occurs when grouping children in such a manner. Sectioning off children into narrow bands of same-age peers does not make them better able to interact with society at large. In fact, sectioning off children in this way does just the opposite—it restricts their ability to practice interacting with a wide variety of people. So why do we worry about homeschooled children’s socialization?  The erroneous assumption is that the child will be homeschooled and will be at home, schooling in the house, all day every day, with no interactions with other people. Unless a family is remotely located in a desolate place away from any form of civilization, social isolation is highly unlikely. Every homeschooling family I know involves their children in daily life—going to the grocery store or the bank, running errands, volunteering in the community, or participating in sports, arts, or community classes. Within the homeschooled community, sports, arts, drama, co-op classes, etc., are usually sectioned by elementary, pre-teen, and teen groupings. This allows students to interact with a wider range of children, and the interactions usually enhance a child’s ability to interact well with a wider age-range of students. Additionally, being out in the community provides many opportunities for children to interact with people of all ages. When homeschooling groups plan field trips, there are sometimes constraints on the age range, depending upon the destination, but many times the trip is open to children of all ages. As an example, when our group went on a field trip to the Federal Reserve Bank, all ages of children attended. The tour and information were of interest to all of the children in one way or another. After the tour, our group dined at a nearby food court. The parents sat together to chat and the children all sat with each other, with kids of all ages talking and having fun with each other. When interacting with society, exposure to a wider variety of people makes for better overall socialization. Many homeschooling groups also have park days, game days, or play days that allow all of the children in the homeschooled community to come together and play. Usually such social opportunities last for two, three, or four hours. Our group used to have Friday afternoon “Park Day.”  After our morning studies, we would pack a picnic lunch, drive to the park, and spend the rest of the afternoon letting the kids run and play. Older kids would organize games and play with younger kids, which let them practice great leadership skills. The younger kids truly looked up to and enjoyed being included in games with the older kids.

President Theodore Roosevelt had created the bureau in 1908, hoping to fill the void in federal law enforcement. (Because of lingering opposition to a national police force, Roosevelt’s attorney general had acted without legislative approval, leading one congressman to label the new organization a “bureaucratic bastard.”) When White entered the bureau, it still had only a few hundred agents and only a smattering of field offices. Its jurisdiction over crimes was limited, and agents handled a hodgepodge of cases: they investigated antitrust and banking violations; the interstate shipment of stolen cars, contraceptives, prizefighting films, and smutty books; escapes by federal prisoners; and crimes committed on Indian reservations.

Why Did the Stock Market Crash? The most persuasive explanation for the 1929 stock market crash blames the Federal Reserve. Throughout the 1920s, but particularly in 1927, the Fed pumped artificial credit into the loan market, pushing down interest rates from their free-market level. Lower interest rates exaggerated the feeling of prosperity, and misled businesses and investors. In a laissez-faire market where money and banking are not disturbed by the government, the interest rate is a price that tells borrowers how much capital citizens have saved and made available to fund projects. But when the Fed adopts an “easy-money” policy by pushing down interest rates, this signal is distorted and the interest rate no longer does its job of channeling the available capital into the most deserving projects. Instead, an unsustainable boom develops, with firms hiring workers and starting production processes that will have to be discontinued once the Fed slows down its injections of new money. Many economists point to the Fed hikes in interest rates during 1928 and 1929 as the cause of the stock market crash. In a sense this is true, but the deeper point is that the crash was made inevitable by the bubble in the stock market fueled by the artificially cheap credit preceding the hikes. In other words, when the Fed stopped pumping in gobs of new money that pushed up the stock market, investors came to their senses and asset prices plunged back towards their pre-bubble level.

If it was a mistake not to finish school (it wasn't!), it was an even worse mistake to go to work. ("Work! The word was so painful he couldn't bring himself to pronounce it," says a character in one of Cossery's books.) Until I was almost eighteen I had know freedom, a relative freedom, which is more than most people ever get to know. (It included "freedom of speech," which has hung over into my writing.) Then, like an idiot, I entered the lists. Overnight, as it were, the bit was put in my mouth, I was saddled, and the cruel rowels were dug into my tender flanks. It didn't take long to realize what a shithouse I had let myself into. Every new job I took was a step further in the direction of "murder, death and blight." I think of them still as prisons, whorehouses, lunatic asylums: the Atlas Portland Cement Co., the Federal Reserve Bank, the Bureau of Economic Research, the Charles Williams Mail Order House, the Western Union Telegraph Co., etc. To think that I wasted ten years of my life serving these anonymous lords and masters! That look of rapture in Pookie's eyes, that look of supreme admiration which I reserved for such as Eddie Carney, Lester Reardon, Johnny Paul: it was gone, lost, buried. It returned only when, much later, I reached the point where I was completely cut off, thoroughly destitute, utterly abandoned. When I became the nameless one, wandering as a mendicant through the streets of my own home town. Then I began to see again, to look with eyes of wonder, eyes of love, into the eyes of my fellow-man.

The phone rang. It was a familiar voice. It was Alan Greenspan. Paul O'Neill had tried to stay in touch with people who had served under Gerald Ford, and he'd been reasonably conscientious about it. Alan Greenspan was the exception. In his case, the effort was constant and purposeful. When Greenspan was the chairman of Ford's Council of Economic Advisers, and O'Neill was number two at OMB, they had become a kind of team. Never social so much. They never talked about families or outside interests. It was all about ideas: Medicare financing or block grants - a concept that O'Neill basically invented to balance federal power and local autonomy - or what was really happening in the economy. It became clear that they thought well together. President Ford used to have them talk about various issues while he listened. After a while, each knew how the other's mind worked, the way married couples do. In the past fifteen years, they'd made a point of meeting every few months. It could be in New York, or Washington, or Pittsburgh. They talked about everything, just as always. Greenspan, O'Neill told a friend, "doesn't have many people who don't want something from him, who will talk straight to him. So that's what we do together - straight talk." O'Neill felt some straight talk coming in. "Paul, I'll be blunt. We really need you down here," Greenspan said. "There is a real chance to make lasting changes. We could be a team at the key moment, to do the things we've always talked about." The jocular tone was gone. This was a serious discussion. They digressed into some things they'd "always talked about," especially reforming Medicare and Social Security. For Paul and Alan, the possibility of such bold reinventions bordered on fantasy, but fantasy made real. "We have an extraordinary opportunity," Alan said. Paul noticed that he seemed oddly anxious. "Paul, your presence will be an enormous asset in the creation of sensible policy." Sensible policy. This was akin to prayer from Greenspan. O'Neill, not expecting such conviction from his old friend, said little. After a while, he just thanked Alan. He said he always respected his counsel. He said he was thinking hard about it, and he'd call as soon as he decided what to do. The receiver returned to its cradle. He thought about Greenspan. They were young men together in the capital. Alan stayed, became the most noteworthy Federal Reserve Bank chairman in modern history and, arguably the most powerful public official of the past two decades. O'Neill left, led a corporate army, made a fortune, and learned lessons - about how to think and act, about the importance of outcomes - that you can't ever learn in a government. But, he supposed, he'd missed some things. There were always trade-offs. Talking to Alan reminded him of that. Alan and his wife, Andrea Mitchell, White House correspondent for NBC news, lived a fine life. They weren't wealthy like Paul and Nancy. But Alan led a life of highest purpose, a life guided by inquiry. Paul O'Neill picked up the telephone receiver, punched the keypad. "It's me," he said, always his opening. He started going into the details of his trip to New York from Washington, but he's not much of a phone talker - Nancy knew that - and the small talk trailed off. "I think I'm going to have to do this." She was quiet. "You know what I think," she said. She knew him too well, maybe. How bullheaded he can be, once he decides what's right. How he had loved these last few years as a sovereign, his own man. How badly he was suited to politics, as it was being played. And then there was that other problem: she'd almost always been right about what was best for him. "Whatever, Paul. I'm behind you. If you don't do this, I guess you'll always regret it." But it was clearly about what he wanted, what he needed. Paul thanked her. Though somehow a thank-you didn't seem appropriate. And then he realized she was crying.

How is money created? An example: You buy a house or take out a mortgage on the excess value of your property. You want 200,000 Dollars. The following happens. The bank’s computer adds these virtual numbers - because that is what they are - to your bank account, and then you have to bleed for the next 30 years, WITH INTEREST. The bank attached a fictional number to your name and for 30 years you need to work to pay the money back. The bank didn’t build your house, nor did it pay for the materials. That was done by people like you and me. They too have to pay, because they also have a mortgage. And when you die, your kids will have to pay taxes on your estate. Often, they have to take out a mortgage of their own to do so[74]. Another example of how banks create money out of nothing: You go to the bank to lend 1,000 Dollars. One year later, you have to pay 1,100 Dollars back, including interest. The additional 100 Dollars come from fellow citizens, for instance in the form of wages or profit sharing. In other words, the extra 100 Dollars come from society. This can only happen when the total amount of money in circulation increases. That increase – inflation – is created when the bank creates more money. In other words: “Interest payments are a direct way to create money.” All the money that exists comes from the bank. This remarkable phenomenon has been described as follows by Mr. Robert Hemphill, Credit Manager of the Federal Reserve Bank in Atlanta: “If all the bank loans were paid, there would not be a dollar in circulation. This is a staggering thought. We are completely dependent on the commercial banks. Someone has to borrow every dollar we have in circulation, cash, or credit. If the banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless situation is almost incredible - but there it is.”[75]

The Federal Reserve The Federal Reserve Bank was founded in 1913. Most people think that this bank is an American Federal Company. That is just as wrong as the conviction that the Bank of England belongs to the British Crown or to the whole of England. The Federal Reserve is in the hands of the Rothschilds and company. In his speech before the Senate, on December 15, 1987, Senator Jesse Helms said: “The principal instrument of the control over the American economy and money is the Federal Reserve System.” The Federal Reserve has a monopoly over the expenditure of the dollar as a world currency and determining the interest rate, and it disposes of a lot more monopolies. How does the Federal Reserve Bank operate? Suppose the United States government needs a couple of billion dollars for its expenses that cannot be paid with taxes income. At that moment it addresses the Federal Reserve Board. Then government bonds for the needed billion dollars are printed in the Bureau of Printing and Engraving. After these bonds are handed over to the bankers of the Federal Reserve, the board grants a loan to the government in the amount of the bond issue. The Federal Reserve draws interest from the government from the day the bonds are delivered. From that day on the government is allowed to draw checks against the Federal Reserve for the amount of the bonds. What are the consequences of this incredible transaction? The government simply saddles the people with a billion dollar debt to the Federal Reserve Bank, apart from the interest on interest that also has to be paid by “ordinary people”. What does the Federal Reserve have to say about “their” money? “Neither paper currency nor deposits have value as commodities. Intrinsically, a dollar bill is just a piece of paper, deposits merely book entries.”[76] When the Federal Reserve needs new, or more, currency to transact its business, it takes the bonds over to the United States Treasury for safekeeping and asks the Treasury Department for the billions of dollars of new currency it needs. The Bank is accommodated on condition that it will pay the printing bill. It only pays for the expenditure costs of the banknotes, which are no more than a mere 500 dollars for ink and paper!

SINCE the financial crisis, it has become commonplace to argue that banks should be run as utilities, not casinos. At least in terms of their financial performance, that seems to be happening. In 2006, the eight American banks that regulators have since labelled “globally systemically important” generated casino-like profits, with returns on equity of 30% on average, according to Oliver Wyman, a consultancy. They are currently managing less than 11%, and there is worse to come: the Federal Reserve recently announced plans to oblige them to raise extra capital. By one calculation that would reduce their return on equity to little over 8%, other things being equal—a lower return than America’s water companies make. And other things are unlikely to be equal. American regulators continue to biff big banks with blistering fines. Then there is the requirement that banks produce “living wills”, explaining how they could be wound down if disaster strikes: the regulators have rejected every single “will” they have received so far as too flimsy. Making banks easier to close down will probably leave them even less profitable.

Politicians are the only people in the world who create problems and then campaign against them. Have you ever wondered why, if both the Democrats and Republicans are against deficits, we have deficits? Have you ever wondered why if all politicians are against inflation and high taxes, we have inflation and high taxes? You and I don’t propose a federal budget. The president does. You and I don’t have Constitutional authority to vote on appropriations. The House of Representatives does. You and I don’t write the tax code. Congress does. You and I don’t set fiscal policy. Congress does. You and I don’t control monetary policy. The Federal Reserve Bank does. One hundred senators, 435 congressmen, one president and nine Supreme Court justices — 545 human beings out of 235 million — are directly, legally, morally and individually responsible for the domestic problems that plague this country. I excused the members of the Federal Reserve Board because that problem was created by the Congress. In 1913, Congress delegated its Constitutional duty to provide a sound currency to a federally chartered by private central bank. I exclude all of the special interests and lobbyists for a sound reason. They have no legal authority. They have no ability to coerce a senator, a congressman or a president to do one cotton-picking thing. I don’t care if they offer a politician $1 million in cash. The politician has the power to accept or reject it. No matter what the lobbyist promises, it is the legislators’ responsibility to determine how he votes. Don’t you see the con game that is played on the people by the politicians? Those 545 human beings spend much of their energy convincing you that what they did is not their fault. They cooperate in this common con regardless of party. What separates a politician from a normal human being is an excessive amount of gall. No normal human being would have the gall of Tip O’Neill, who stood up and criticized Ronald Reagan for creating deficits. The president can only propose a budget. He cannot force the Congress to accept it. The Constitution, which is the supreme law of the land, gives sole responsibility to the House of Representatives for originating appropriations and taxes. Those 545 people and they alone are responsible. They and they alone should be held accountable by the people who are their bosses — provided they have the gumption to manage their own employees.

These are a substantial number of “they” who once a year meet to deliberate the fate of national economies and, hence, entire populations. Many of them also believe in the mandate of eugenics, the practice of improving the human race to include reducing the population. Know that we do not have the names of every attendee. Only those who authorize the release of their names get mentioned in the public media. Daniel Estulin, author of The True Story of the Bilderberg Group, wrote that the group’s membership and meeting participants have represented a “who’s who” of the world power elite with familiar names like David Rockefeller, Henry Kissinger, Bill and Hillary Clinton, Gordon Brown, Angela Merkel, Alan Greenspan, Ben Bernanke, Larry Summers, Tim Geithner, Lloyd Blankfein, George Soros, Donald Rumsfeld, Rupert Murdoch, other heads of state, influential senators, congressmen, and parliamentarians, Pentagon and NATO brass, members of European royalty, selected media figures, and invited others. Such invitees have included President Obama along with many of his top officials. Estulin said that also represented at Bilderberg meetings are leading figures from the Council on Foreign Relations (CFR), IMF, World Bank, the Trilateral Commission, EU, and powerful central bankers from the Federal Reserve, the European Central Bank (ECB), and the Bank of England. David Rockefeller, the head of the Rockefeller family financial empire, is believed to have been a leading Bilderberg attendee for years. Other wealthy elite members merely send representatives.

In the February 9, 1935, issue of the Saturday Evening Post, an article appeared written by Frank Vanderlip. In it he said: Despite my views about the value to society of greater publicity for the affairs of corporations, there was an occasion, near the close of 1910, when I was as secretive—indeed, as furtive—as any conspirator.... I do not feel it is any exaggeration to speak of our secret expedition to Jekyll Island as the occasion of the actual conception of what eventually became the Federal Reserve System.... We were told to leave our last names behind us. We were told, further, that we should avoid dining together on the night of our departure. We were instructed to come one at a time and as unobtrusively as possible to the railroad terminal on the New Jersey littoral of the Hudson, where Senator Aldrich's private car would be in readiness, attached to the rear end of a train for the South.... Once aboard the private car we began to observe the taboo that had been fixed on last names. We addressed one another as "Ben," "Paul," "Nelson," "Abe"—it is Abraham Piatt Andrew. Davison and I adopted even deeper disguises, abandoning our first names. On the theory that we were always right, he became Wilbur and I became Orville, after those two aviation pioneers, the Wright brothers.... The servants and train crew may have known the identities of one or two of us, but they did not know all, and it was the names of all printed together that would have made our mysterious journey significant in Washington, in Wall Street, even in London. Discovery, we knew, simply must not happen, or else all our time and effort would be wasted. If it were to be exposed publicly that our particular group had got together and written a banking bill, that bill would have no chance whatever of passage by Congress.

As I saw it, there was a 75 percent chance the Fed’s efforts would fall short and the economy would move into failure; a 20 percent chance it would initially succeed at stimulating the economy but still ultimately fail; and a 5 percent chance it would provide enough stimulus to save the economy but trigger hyperinflation. To hedge against the worst possibilities, I bought gold and T-bill futures as a spread against eurodollars, which was a limited-risk way of betting on credit problems increasing. I was dead wrong. After a delay, the economy responded to the Fed’s efforts, rebounding in a noninflationary way. In other words, inflation fell while growth accelerated. The stock market began a big bull run, and over the next eighteen years the U.S. economy enjoyed the greatest noninflationary growth period in its history. How was that possible? Eventually, I figured it out. As money poured out of these borrower countries and into the U.S., it changed everything. It drove the dollar up, which produced deflationary pressures in the U.S., which allowed the Fed to ease interest rates without raising inflation. This fueled a boom. The banks were protected both because the Federal Reserve loaned them cash and the creditors’ committees and international financial restructuring organizations such as the International Monetary Fund (IMF) and the Bank for International Settlements arranged things so that the debtor nations could pay their debt service from new loans. That way everyone could pretend everything was fine and write down those loans over many years. My experience over this period was like a series of blows to the head with a baseball bat. Being so wrong—and especially so publicly wrong—was incredibly humbling and cost me just about everything I had built at Bridgewater. I saw that I had been an arrogant jerk who was totally confident in a totally incorrect view. So there I was after eight years in business, with nothing to show for it. Though I’d been right much more than I’d been wrong, I was all the way back to square one.

KEYNESIAN ECONOMICS AND STIMULUS Keynesian economics is based on the notion that unemployment arises when total or aggregate demand in an economy falls short of the economy’s ability to supply goods and services. When products go unsold, jobs are lost. Aggregate demand, in turn, comes from two sources: the private sector (which is the majority) and the government. At times, aggregate demand is too buoyant—goods fly off the shelves and labor is in great demand—and we get rising inflation. At other times, aggregate demand is inadequate—goods are hard to sell and jobs are hard to find. In those cases, Keynes argued in the 1930s, governments can boost employment by cutting interest rates (what we now call looser monetary policy), raising their own spending, or cutting people’s taxes (what we now call looser fiscal policy). By the same logic, when there is too much demand, governments can fight actual or incipient inflation by raising interest rates (tightening monetary policy), increasing taxes, or reducing its own spending (thus tightening fiscal policy). That’s part of standard Keynesian economics, too, although Keynes, writing during the Great Depression, did not emphasize it. Setting aside the underlying theory, the central Keynesian policy idea is that the government can—and, Keynes argued, should—act as a kind of balance wheel, stimulating aggregate demand when it’s too weak and restraining aggregate demand when it’s too strong. For decades, American economists took for granted that most of that job should and would be done by monetary policy. Fiscal policy, they thought, was too slow, too cumbersome, and too political. And in the months after the Lehman Brothers failure, the Federal Reserve did, indeed, pull out all the stops—while fiscal policy did nothing. But what happens when, as was more or less the case by December 2008, the central bank has done almost everything it can, and yet the economy is still sinking? That’s why eyes started turning toward Congress and the president—that is, toward fiscal stimulus—after the 2008 election.

Lending dollars to the U.S. government is essentially riskless because the U.S. government can always pay such debts. If necessary, the Federal Reserve can print dollars to pay the debt.

The Federal Reserve and other central banks could print more money only if they managed to get their hands on more gold.

Your committee is satisfied from the proofs submitted ... that there is an established and well defined identity and community of interest between a few leaders of finance ... which has resulted in great and rapidly growing concentration of the control of money and credit in the hands of these few men.... Under our system of issuing and distributing corporate securities the investing public does not buy directly from the corporation. The securities travel from the issuing house through middlemen to the investor. It is only the great banks or bankers with access to the mainsprings of the concentrated resources made up of other people's money, in the banks, trust companies, and life insurance companies, and with control of the machinery for creating markets and distributing securities, who have had the power to underwrite or guarantee the sale of large-scale security issues. The men who through their control over the funds of our railroad and industrial companies are able to direct where such funds shall be kept, and thus to create these great reservoirs of the people's money are the ones who are in a position to tap those reservoirs for the ventures in which they are interested and to prevent their being tapped for purposes which they do not approve.... When we consider, also, in this connection that into these reservoirs of money and credit there flow a large part of the reserves of the banks of the country, that they are also the agents and correspondents of the out-of-town banks in the loaning of their surplus funds in the only public money market of the country, and that a small group of men and their partners and associates have now further strengthened their hold upon the resources of these institutions by acquiring large stock holdings therein, by representation on their boards and through valuable patronage, we begin to realize something of the extent to which this practical and effective domination and control over our greatest financial, railroad and industrial corporations has developed, largely within the past five years, and that it is fraught with peril to the welfare of the country.3 Such was the nature of the wealth and power represented by those six men who gathered in secret that night and travelled in the luxury of Senator Aldrich's private car.

Competition also was coming from a new trend in industry to finance future growth out of profits rather than from borrowed capital. This was the outgrowth of free-market interest rates which set a realistic balance between debt and thrift. Rates were low enough to attract serious borrowers who were confident of the success of their business ventures and of their ability to repay, but they were high enough to discourage loans for frivolous ventures or those for which there were alternative sources of funding—for example, one's own capital. That balance between debt and thrift was the result of a limited money supply. Banks could create loans in excess of their actual deposits, as we shall see, but there was a limit to that process. And that limit was ultimately determined by the supply of gold they held. Consequently, between 1900 and 1910, seventy per cent of the funding for American corporate growth was generated internally, making industry increasingly independent of the banks.12 Even the federal government was becoming thrifty. It had a growing stockpile of gold, was systematically redeeming the Greenbacks—which had been issued during the Civil War—and was rapidly reducing the national debt. Here was another trend that had to be halted. What the bankers wanted—and what many businessmen wanted also—was to intervene in the free market and tip the balance of interest rates downward, to favor debt over thrift. To accomplish this, the money supply simply had to be disconnected from gold and made more plentiful or, as they described it, more elastic.

The Federal Reserve Bank of Richmond has estimated that 61 percent of all private-sector financial liabilities are guaranteed by the federal government, either explicitly or implicitly. As recently as 1999, this figure was below 50 percent.

These policies would come back to haunt Europe in the aftermath of the 2008 collapse. Instead of the vigorous, countercyclical fiscal, monetary, and debt relief policies called for in the wake of a 1929-scale crash, Europe’s institutions promoted austerity reminiscent of the post–World War I era. The debt and deficit limits of Maastricht precluded strong fiscal stimulus, and the government of Angela Merkel resisted emergency waivers. Germany, an export champion, which in effect had an artificially cheap currency in the euro, profited from other nations’ misery. Germany could prosper by running a large export surplus (equal to almost 10 percent of its GDP), but not all nations can have surpluses. The European Central Bank, which reported to nineteen different national masters that used the euro, had neither the tools nor the mandate available to the US Federal Reserve. The ECB did cut interest rates, but it did not engage in the scale of credit creation pursued by the Fed. The Germans successfully resisted any Europeanizing of the sovereign debt of the EU’s weaker nations, pressing them instead to regain the confidence of capital markets by deflating. Sovereign debt financing by the ECB went mainly to repay private and state creditors, not to rekindle growth. Thus did “fortress Europe,” which advocates and detractors circa 1981 both saw as a kind of social democratic alternative to the liberal capitalism of the Anglo-Saxon nations, replicate the worst aspects of a global system captive to the demands of speculative private capital. The Maastricht constitution not only internalized those norms, but enforced them. The dream of managed capitalism on one continent became a laissez-faire nightmare—not laissez-faire in the sense of no rules, but rather rules structured to serve corporations and banks at the expense of workers and citizens. The fortress became a brig. There was plenty to criticize in the US response to the 2008 collapse—too small a stimulus, too much focus on deficit reduction, too little attention to labor policy, too feeble a financial restructuring—but by 2016, US unemployment had come back down to less than 5 percent. In Europe, it remained stuck at more than 10 percent, with all of the social dynamite produced by persistent joblessness.

Friend! There’s a subtle feature of speculative behaviour which reflects the public attitude to money itself. When money is in its right place, fulfilling its proper function, men’s minds are fixed upon the goods and services which money can help them to exchange. In such an economic environment the producers of real wealth are seen to earn a fitting reward for their labours and expertise, and in fact productive and community endeavour are portrayed universally as almost the sole means whereby the individual can get himself a goodly share of the world’s riches. Let there just be a change in the emphasis however. Raise the interest rates. Exacerbate the debt structure. Turn money into a commodity which can be bought and sold at a profit. Then you create a breed of men who live by their dexterity at the exchanges. When these men are seen to prosper more considerably than the producers of goods and services, there is a desire amongst the ordinary plodding citizenry to command a share of the action, and to participate in what are seen as easily made profits. Many a fond illusion was wiped out in the collapse of Wall Street share values during the crash of 1929. Whole volumes have been written about its causes and repercussions, and about the sinister shift in real estate ownership which took place during the spate of liquidations and forced sales which followed. But we shall content ourselves meanwhile with the comment that it was just one of a chain of events that were set in motion way back in 1913 when the Federal Reserve Bank was formed to lend money to the Government.

The Federal Reserve System had been established to prevent what actually happened. It was set up to avoid a situation in which you would have to close down banks, in which you would have a banking crisis. And yet, under the Federal Reserve system, you had the worst banking crisis in the history of the United States

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The Fed’s fingerprints were all over this boom, and not just because of Greenspan’s low interest rates. In 1993, in response to initiatives by the Clinton administration to make housing more affordable for minorities and the poor, the Boston Fed produced a widely circulated paper called “Closing the Gap: A Guide to Equal Opportunity Lending.” “Lack of credit history should not be seen as a negative factor” in obtaining a mortgage, the Boston Fed guide noted. As an effort to counter “unintentional” racism in lending markets, the guide sanctioned lowering traditional mortgage-lending standards. Not enough saved for a down payment? No problem. The Boston Fed’s PhDs encouraged banks to allow loans from nonprofits or government assistance agencies to go toward a borrower’s down payment, though such borrowers are more likely to default on their mortgages. The Boston Fed distributed more than ninety thousand copies of this remarkably naïve guide. The mortgage industry, anxious to extend its reach and generate fees, embraced its suggestions.

We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it.

The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered.” -Thomas Jefferson (this describes where we are at today under the Federal Reserve) “The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.” -The Rothschild brothers of London, writing to associates in New York, 1863.

Gradually I began to notice a peculiar thing. These men had done everything from bust into a piggy bank on the Federal Reserve to murder, rape, arson, bank robbery with hardware apprehended--they had run through the whole of Title 18 of the U.S. Criminal Code and illustrated it for the government. Yet, invariably they would bit their fingernails in exasperation and total disapproval of the villain, and when the cops, especially the sainted U.S. Marshals, with supernatural powers of marksmanship and divinations appeared to rescue the gal, actually and literally cheer. When the villain was liquidated, or led off in chains, they approved thoroughly. If the gendarmerie had lost for once they would have taken the TV set apart.

Follow-up Call (Script) Seller: “Hello Mr. Prospect, my name is Tom Freese, and I’m the regional manager for KnowledgeWare in Kansas City. I wanted to contact you about the CASE application development seminar we are hosting at IBM’s Regional Headquarters on August 26. Do you remember receiving the invitation we sent you? (Pause for a response) “Frankly, we are expecting a record turnout—over one hundred people, including development managers from Sprint, Hallmark Cards, Pepsi Co., Yellow Freight, Kansas Power & Light, the Federal Reserve Bank, Northwest Mutual Life, American Family Life, St. Luke’s Hospital, Anheuser-Busch, MasterCard, American Express, Worldspan, and United Airlines, just to name a few. “I wanted to follow up because we haven’t yet received an RSVP from your company, and I wanted to make sure you didn’t get left out.” Granted, this was a highly positioned approach, but it was also 100 percent accurate. I wanted prospects to know that IBM was endorsing this event. I also wanted to let them know that I expected “everyone else” to participate. I accomplished this by rattling off an impressive list of marquee company names that we were “expected” to attend. Most importantly, I wanted to make sure that they didn’t get left out.

The Federal Reserve Act was passed by Congress in 1913 while most of its members were on Christmas vacation giving all powers to this newly created central bank to issue legal tender and regulate the money supply as it saw fit.

The deals hatched in sleepless sessions at the Federal Reserve Bank of New York or at Treasury were no different. They were products of their moment.

How do you draw the line between a healthy, exciting economic boom and a wanton, speculative stock-market bubble driven by the less savory aspects of human nature? As I pointed out drily to the House Banking Committee, the question was all the more complicated because the two can coexist.

Approximately three thousand people work for the Bureau of Engraving. It takes 490 notes to make a pound, and it would require 14.5 million notes to make a stack one mile high. Coin and paper account for only about 8 percent of all the dollars in the world. The rest are merely numbers in a ledger or tiny electronic blips on a computer chip. At the end of the process, the workers bundle the bills into packages of 100, which they then stack into bricks of 4,000. These bricks are loaded onto a pallet for transport to the basement from where they will be sent to the various Federal Reserve offices around the nation for distribution to banks and the public. Along the way, the curious visitors pepper the guides with questions: Q. Why are so many employees listening to music on headphones? A. To block the loud sound of the printing, cutting, and stacking machines. Q. Why are some of them eating? A. They are on break. Q. Why are all of the checkers so fat? A. Because they sit all day and watch money go by with little chance for exercise.

The central bank’s bond purchases or sales are also an important indication of where the value of the dollar is headed. Is the Fed continuing its bond purchases and further expanding the money supply? Or, is it shrinking the monetary base by selling those securities? The answers may be found on the Federal Reserve balance sheet.

I cannot say enough good things about Ben Bernanke and Tim Geithner, then president of the Federal Reserve Bank of New York, who were true partners.

When in trouble, commercial banks could turn to the Federal Reserve as their lender of last resort.

Unknown to most people, much of the gold that had supposedly flown into France as actually sitting in London. Bullion was so heavy - a seventeen-inch cube weighs about a ton - that instead of shipping crates of it across hundreds of miles from one country to another and paying high insurance, central banks had taken to "earmarking" the metal, that is, keeping it in the same vault but simply re-registering its ownership. Thus the decline in Britain's gold reserves and their accumulation in France and the United States was accomplished by a group of men descending into the vaults of the Bank of England, loading some bars of bullion onto a low wooden truck with small rubber tires, trundling them thirty feet across the room to the other wall, and offloading them, though not before attaching some white name tags indicating that the gold now belonged to the Banque de France or the Federal Reserve Bank. That the world was being subject to a progressively tightening squeeze on credit just because there happened to be too much gold on one side of the vault and not enough on the other provoked Lord d'Abrenon, Britain's ambassador to Germany after the war and now an elder statesmen-economist, to exclaim, "This depression is the stupidest and most gratuitous in history.

Within the Fed, officials were fully aware of the strains on the financial system - the hoarding of currency, the growing problem of bank failures, the reluctance of banks to lend, prices falling at a rate of 20 percent per annum. Somehow they were unable to put all these pieces of the jigsaw puzzle together. At the Federal Reserve Board, Meyer pressed for a more aggressive policy and even Adolph Miller, who with his natural contrarian streak, seemed to end up so often in the minority, joined him. But the Board was legally powerless to initiate action.

On Monday, Lehman Brothers had filed for bankruptcy, and Merrill Lynch, having announced $55.2 billion in losses on subprime bond–backed CDOs, had sold itself to Bank of America. The U.S. stock market had fallen by more than it had since the first day of trading after the attack on the World Trade Center. On Tuesday the U.S. Federal Reserve announced that it had lent $85 billion to the insurance company AIG, to pay off the losses on the subprime credit default swaps AIG had sold to Wall Street banks—the biggest of which was the $13.9 billion AIG owed to Goldman Sachs. When you added in the $8.4 billion in cash AIG had already forked over to Goldman in collateral, you saw that Goldman had transferred more than $20 billion in subprime mortgage bond risk into the insurance company, which was in one way or another being covered by the U.S. taxpayer.