by Gene Denardo

Created on: April 29, 2009

There is no question that in the best interests of the United States and the American Economy that the Federal Reserve should be carefully dismantled. The recent economic events are primarily a result of the actions of the Federal Reserve and the future can only hold similar scenarios as long as it remains in existence.

The Federal Reserve was created by a Congressional act of law in 1913. It was lobbied into existence by a select group of the wealthiest bankers and industrialists of the time. It has fulfilled its function; to extend and maximize the power and control of the banking industry over the economy. It is time to free the economy from this artificial banking cartel.

Banks must operate competitively for Capital to move freely within the economy. This is impossible as long as the Fed exists. The primary form of Capital that banks compete for is money and there can be no competition when the Fed is constantly creating money from nothing and distributing it at suppressed artificial rates to whoever it sees fit. This is the definition of a "controlled" economy, controlled from the financial sector down, and in no way resembles the "free" economy it so often claims to be.

Instead of direct competition for access to money, banks instead compete for a place in the "lineup" of selected traders that the are bestowed the benefits of the Federal Reserve's money creation powers. What is left then, is simply competition not for the funds themselves, but for the amount of profit they can realize on this guaranteed source of money. This would be analogous to grocery stores competing not for how many apples and oranges they can sell, but for the amount of apples and oranges they are "guaranteed" to sell!

The Federal Reserve exerts its control over the economy by determining the amount of money it will "create" and the base interest rate it will trade that money at. It "creates" money by purchasing securities from its group of "selected" traders. These firms have accounts with the Fed and when they sell a security to the Fed, the Chairman of the Fed simply "credits" their accounts with the amount of the security. Money has been magically created out of nothing and the firm is free to spend or loan it as they will, infusing this new money into the economy.

The corresponding prime interest rate is also set by the Open Market Committee of the Federal Reserve. With this base rate set and the amount of funds available controlled by the issuing and purchasing of Securities, the

• 1
• 2
• 3
• Next Page >>