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« A Comic Banker Explains How The Markets work! | Main | Agnico-Eagle Mines Call Options: Re-visited! »
Friday
Oct032008

The Federal Reserve: The Greatest Scam In History? (Revisited)

IRS picture 04oct08


We first posted this article on 13th August 2007 when it appeared to us that the US Dollar along with the economy was heading into such dangerous waters that gold would be the beneficiary. At the time gold was trading at around $670/oz and it closed yesterday at $834.80 for a gain of $164.80 or 24%.

If we fast forward to time now and read any newspaper the headlines are dominated with the fire fighting actions being implemented by the Federal Reserve with bankers and politicians in tow. From these bailouts we can only conclude that the dilution of paper money will continue with the pace of dilution accelerating, resulting in massive inflation and propelling the precious metals to higher ground. If you have the time, please read this article and then take a look at what’s happening around you and then find the time to question what you are doing and why you are doing it. Being too busy to organise your own affairs is a poor excuse. Just switch the television off for a couple of nights and clear your head, the way forward for you personally will become apparent.

The Federal Reserve: The Greatest Scam In History?

13th August 2007

The Federal Reserve was created in 1913-1914 in order to bring stability to the economy and yet almost every major crash, including the great depression, can be attributed to the Federal Reserve.

We are going to take a look at the history of the Fed and what prominent historical figures have said about the organisation.

Firstly, from 1837-1862 there was a system of national banks in the USA but then in 1913-1914 a consortium of 12 privately held banks got together and formed the Federal Reserve Bank, an entity that is not part of the US government. These banks then purchased notes from the US Mint for printing costs and lent them out through member banks charging interest.

The Federal Reserve came into being after its supporters paid for the Presidential campaign of US President Woodrow Wilson. Wilson signed the bill that transferred the US currency to twelve regional private banks Wilson regretted his decision later saying:

“I am a most unhappy man. I have unwittingly ruined my country. 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 civilized 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 a small group of dominant men.”

In 1933 President Roosevelt confiscated citizens gold and handed it to the Federal Reserve. At the very moment when Americans have needed to protect their wealth the most, the best store of wealth ever created, gold, was confiscated from American citizens and given to a un-elected conglomerate of private banks.

When the bill for the Federal Reserve was being considered, some brave politicians spoke out against its creation calling it “the strangest, most dangerous advantage ever placed in the hands of a special privilege class by any Government that ever existed” and Congressman Victor Murdock said, “I do not blind myself to the fact that this measure will not be effectual as a remedy for a great national evil – the concentrated control of credit.”

It even appears that one of the most important and most respected figures in American history disagrees with the Federal Reserve saying, “If the American people ever allow private banks to control the issue 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 wake up homeless on the continent their fathers conquered.”

Jefferson also said, “I sincerely believe the banking institutions having the issuing power of money are more dangerous to liberty than standing armies”
“Paper is poverty… it is only the ghost of money, and not money itself.”

The Federal Reserve make no secret about the scam they are running as the Boston section of the Federal Reserve Bank said:
“When you or I write a check there must be sufficient funds in our account to cover the cheque, but when the Federal Reserve writes a check there is no bank deposit on which that cheque is drawn. When the Federal Reserve writes a cheque, it is creating money.”

Perhaps the Fed can create money, but we strongly believe that wealth cannot be created. Wealth is simply transferred, it is not created and we challenge anyone to prove otherwise. The only time wealth was created was when the world was created, with all its resources, true wealth. So why hasn’t the Federal Reserve been disbanded?

Well as the Rothschild Brothers of London said in 1863; “The few who understand the system, will either be so interested from it’s profits or so dependant on it’s favours, that there will be no opposition from that class.”

The great Henry Ford once said “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

The problem is, very few people understand the system at all. It is not taught in schools and even some of the most prominent financial analysts and fund managers really have no idea how the system works. They tend to define inflation as rising prices when in fact inflation occurs because of the expansion of the money supply. Or even link inflation with the economy doing well, saying, “we should raise interest rates as the economy did extremely well this month and we don’t want inflation getting out of hand”, or words to that effect.

What all people, not just investors, need to understand is that paper money is worthless. Gold and precious metals are the real money, the real wealth that cannot be created like its paper ghost.

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Reader Comments (46)

Great article today, you have hit the nail square on the head, the legalised transfer of wealth has been going on for quite a while, at last more and more people are catching on, hopefully these crooks will be put where they belong, but I'm not holding my breath, after all, they run the world.

October 4, 2008 | Unregistered CommenterG.M.

Federal Reserve article - an excellent piece of work. And terrifying!

Keep up the good work, mon Brave!

Frank

October 4, 2008 | Unregistered CommenterFrank

The problem is that the Fed is so powerful, they can do the same thing today - confiscate most of the gold for themselves as they did when FDR did it for them in 1933. Until the Den of Vipers known as the Creature from Jekyl Island has it's ugly head cut off, we live at their mercy.

October 4, 2008 | Unregistered CommenterCosmic

REVOLUTION is the Solution!!!

October 4, 2008 | Unregistered CommenterGeorge W.armonger

Gold may be a good store to retain value for your personal money...but it is a terrible source for a nation's money. There is not enough gold in the world to carry on business...nor is there enough silver!

In addition, who do you think owns most of those two commodities? Who do you think owns the oil and the uranium mines for nuclear reactors/bombs? Who owns the newspapers and tv shows that most people watch?

Fiat money has worked very well for us in the past...look at Lincoln's Greenback! Read "The Web of Debt" by Ellen Brown. Check out the use of Tally Sticks as money! This notion that gold is somehow better than a judiciously created fiat money is simply WRONG! Indeed, the Constitution originally made silver our paper backing...NOT gold!

The people pushing gold and silver are trying to sell everyone their gold and silver...if it was so valuable, why don't they keep it themselves? Why are they trying to sell it to anyone who comes down the pike?

Jerry Bolduc

October 4, 2008 | Unregistered CommenterJerry Bolduc

See the video "The Money Masters" in video.google.com for a good explanation on the biggest scam (well, actually one of many scams).

Spread the word and help bring change.

See EricHufschmid.net for real info.

October 4, 2008 | Unregistered CommenterMario

Its all very well saying gold stores value etc but Im at the stage of packing it al in as gold, silver producers and even the metals are so heavily manipulated will thay ever get the chance to rise??????
Why gold isnt at least $2000 per oz right now says it all and Silver at $12 and going down????

Whats the point anymore the FED wont ever allow it to rise too much.

Only thing I can think of is a war as a market crash will just drags them down like AIG, LEH on steroids

Any suggestions?

October 4, 2008 | Unregistered Commenterdoug reid

Actually the greatest scam is getting the masses to fight over the different trees in the forest of evil. The fed is bad, but so is 911, chemtrails, all organized religion, mass media, weather manipulation, war, war on terror, war on drugs. The fed is only one tree in the vast forest. As long as the masses keep their eyes on the "different" trees the elite will continue to win. The only real war is the elite against the masses. Fortunately for the elite the masses are fighting each other.

October 4, 2008 | Unregistered CommenterChi0ne1

Aye aye...here you have the MAJOR root of the evil amongst us in our financial system. For those who want to read more about where the Fed came from and who it bows to, read this timeline for a thumbnai-- fascinating, and yes, scary--

http://www.iamthewitness.com/DarylBradfordSmith_Rothschild.htm

October 4, 2008 | Unregistered Commenterjt

I'm not sure who you are and I'm not sure how I got on your email list but I just wanted to say thanks. I enjoy reading your emails and find them very informative. I also like the fact that you seem to subscribe to the "work like dog" theory. In other words, it seems like you are no stranger to hard work. Keep up the good work.

Regards,

George

October 4, 2008 | Unregistered CommenterGeorge

Gold has been money for 5000 years. Your views and opinions on how its not a store of wealth or the Govt may confiscate it is ludicrous and maybe its you tryin to get people to sell there honest money. First of all in 1933 by executive order Gold coins and certificate's were illegal to own. Most did not carry gold in there pocket by then it was mostly paper currency backed by gold for one thing. Any gold coins were deemed collectibles. As is the $20ST GAUDENS gold coin , which by the way your going to wish you had a gazillion of these in the near future. Gold went from $35 to $75 in 4 days the ones who benefited were the foreigners who held them. A windfall over night. So it was a gold crisis then during the Great Depression. In 1971 Nixon reneged on the GOLD standard and told the foregner's to shove it. Another Gold crisis ensued. By the end of the 80's We saw gold rise more 2000% in the best 10year bull market ever second to oil at 1800%. Today we have derivatives standing at $1 quadrillion , geek creations on a computer with no worth when asked to perform in a bankruptcy. GOLD will makes its stand again. My friend since the early 80's Govt mints have encouraged there citizen's to buy GOLD. We will not be fooled again by these pranksters they will have a riot on there hands. Gold will be your only lifeboat in a world awashed in paper confetti.

BJS

October 4, 2008 | Unregistered CommenterGOLDBUG

I sold all my gold stocks today. I've read a lot this weekend about the M3 money supply and the economy from Januari 2009 and am concluding that gold won't rally alot in 2009.
After the interbanking confidence is restored in end of 2009/1010, then we will see money flow back into the system. Do not forget that a big stream of money is vaporized from the markets. This recovery of equity takes time to flow back into the markets, also gold.

Very important parameters;
1. Gold was and will be sold steadily on the world markets by Central banks to support the US Dollar by means of currency swaps.
2. Global economy is contracting. USA in recession, 2nd largest economy Germany facing growth declines and possible recession aswell as many others in Europe. Asia demand in commodities is also lower but economies remain growing. China 7 - 9 procent in 2009.
3. 2009 will be the year of writedowns in my opinion. More banks will fail, 118 more potentials are on the FDIC list, and lots of US homeowners will have to refinance their mortgage (again) and many of them will fail to do so because of new regulations.

Good investing. I'll be back in gold for over a year or so.

ps; 19 october - black monday 1987. Keep it positive :)

October 4, 2008 | Unregistered Commenterde Graaf

Liquidity can never and has never in all of history been drained from any sytem of fiat currency. ALL HAVE RETURNED TO ZERO. The USD dollar will trade much lower and GOLD much higher. The OTC derivatives will make sure of that. You forget my friend that all of Europe and Asia know the store of value GOLD holds in a world of paper manufacturers. How is it that the cash market for GOLD is tight as a banjo string? The Comex price is fabrication beyond your imagination. GOLD is the smallest market in the world being played by the biggest money in the world. Look at the last 10 years GOLD to world currencies ratio chart at KITCO.com. Maybe you will see the light to your ever ending liquidity and low rates to borrow into the ionisphere.

October 4, 2008 | Unregistered CommenterGOLDBUG

You have some good points. I agree.
The question for you is; When will the US currency slide deeper to zero...think about that. US dollar is being backed to save the economic system.
My believe, which I shared with you above, is that the 'Gold rush' is postponed while the M3 money supply is contracting for the time being. Gold will come, no doubt. Question is...when. My analysis says not in 2008 and probably 2009/2010. The long term, yes. short term, no.
Hey, but I could also be deadwrong here. So decide for yourself what you do.

I'm selling gold for now, and risk the timing of the coming gold rally some point later. There are more opportunities in the shorter term in my opinion.

Value investor.

October 4, 2008 | Unregistered Commenterde Graaf

Anyone who still is arguing inflation does not have clue.
You can create as much money as you want. But if you cannot get at the money it does no good. This moeny is going into deleveraging banks. And Banks are not lending it out to people. That is deflationary!

.

rg

October 4, 2008 | Unregistered CommenterRG

I'm fully with RG.
Its hard for people to acknowledge that we are in a deflationary picture here. The US government denies it, and is (arguably) manipulating the inflation and M3 numbers. M3 is not even shown anymore to cover up the real situation of the US economy. Its really bad people.
Bernanke tries to avoid the deflationary period of the 1930's (his academic lifetime dedication) by creating inflation with taxpayers dollars flooding into the markets.
Situation is definately different that the 1930's. My guess its even worse. Unprecedented.

If US consumer spending drops more, prices will fall due to competition. Then commodities prices fall even more and confidence drops to almost zero.

I'm keeping my eyes out for the time being. This is just the beginning of a this credit crisis in my view.
I hope i'm not to cynical here. We need to have confidence.. haha Thats were our stock market rallies on, eventually.

regards,

October 4, 2008 | Unregistered Commenterde Graaf

To the forest metaphor guy: The fed is the entity that maintains the existence of the forest so long as the consensus of mankind is to believe that the dream of this world is real. In the interest of educating your fellow humanity there are two main roads to consider. One, is to orchestrate a mass appeal to the U.S. Congress to abolish the fed and return to Constitutional money. That's a big longshot seeing that you would have to go through a ruling body whose majority is probably never gonna see 'the forest for the trees'. Two, is to become a true agent of change by opening eyes to the scam with the goal being one of non-compliance to the sucking beast. Render it irrelevant as it withers and dies on the vine. Then watch as the world awakens from its nightmare and sees the illusions that it's been all along.

October 5, 2008 | Unregistered CommenterBrownhawk

I read the article about the federal reserve with great interest.I encourage people to buy gold,maybe 5% to 10% of their portfolio's value as insurance for the long term.The time to buy would be when the price of gold has fallen.The fundamental reasons why we need to protect ourselves have not changed and have gotten worse.The federal reserve is responsible for the destruction of our currency by the creation of paper money.This massive creation,as we are seeing now with these government(taxpayer)bailouts will surely dilute the value of the dollar.The way to protect oneself is through the possession of gold and silver,as these will rise in value as the dollar is destroyed by the federal reserve.As one of your commentators has stated,the federal reserve is a major root of the problem.This huge mess is of their creation in part,but the taxpayer will be paying the price.One way to look at federal reserve activity is that of the theft of one's labor(whether that labor is physical or intellectual)by diminishing the value of the money that has already been paid to you by creating more paper money and putting it into the economy.

October 5, 2008 | Unregistered CommenterADW

The right to create money was usurped from the people (Congress) in 1913, and The Fed was born. A corporation owned by a consortium of banks with mainly Rothschild and Morgan foundations, which to this day, still creates money and lends to the US Government, charging interest. As you say, the perfect scam.
JFK signed an Executive Order, disbanding the Fed in, I think, 1957. He was assassinated within months and LBJ rescinded the order. When will america wake up?

October 5, 2008 | Unregistered CommenterJCT

YO!!! I ACCEPT YOUR CHALLENGE!!!

"we strongly believe that wealth cannot be created. Wealth is simply transferred, it is not created and we challenge anyone to prove otherwise."

Wealth CAN be created, is created all the time, not just transferred, which also happens all the time. LABOR CREATES WEALTH. This fundamental fact of life is what allowed the slave holders to become wealthy. The labor of the slaves created wealth for the slave owners. Today's system is only much more complex and slightly more egalitarian.

EVERYONE needs to understand these things. Perhaps the time is ripe for a major shift in understanding... You cannot eat money, or gold, or silver. It will not keep you warm or quench your thirst. These things have EXCHANGE value, not USE value. SURPLUS value is the worth of something produced that the producer is not compensated for. For example, if I do labor that generates $10 of exchange value and I am only paid $1 for it, then whoever is paying me has made a PROFIT of $9. They have, in effect, stolen $9 from me, for the privilege of allowing me to make $1.

Labor should control capital/money/wealth, not the other way around. Allowing capital to control labor is like allowing a child to order a parent around. The parent produces the child as a worker produces capital. To then have the child tell the parent what to do is the hight of absurdity. Until the workers own and control the means of production, we will have disaster.

Eliminate profit by everyone getting paid what they are worth and you eliminate corporations, which is the whole idea. It's not that corporations are inherently bad, Lincoln just screwed up big time by allowing them "person status".

At this stage of the game, our problems are, unfortunately, MUCH bigger than just that. We've also got depleted resources and environmental destruction to contend with, along with over population and under education and a host of other considerations. But wide spread understanding the above is likely a REQUIRED FIRST STEP to solving anything.

October 6, 2008 | Unregistered CommenterMichael Cook

Funny how people want to hoard gold...when the shit hits the fan..you don't need gold..you need food, clothing, and shelter...when you're hungry and cold you'll gladly give all your gold away for 1 loaf of bread to feed your family...or just a few logs of wood to heat your house...or how about just a roll of toilet paper??? Learn how to grow your own food..how to chop wood for a fire...how to skin an animal for something to wear..and most importantly how to shoot the other jerkoffs who try to take your stash because they don't have basic survival skills..

October 6, 2008 | Unregistered CommenterKevin C

“The bank hath benefit of interest on moneys which it creates out of nothing.”
William Patterson, Founder of the Bank of England, 1694

“Thus, our national circulating medium is now at the mercy of loan transactions of banks,
which lend, not money, but promises to supply money they do not possess.”
Irving Fisher, U.S. Economist

“Some people think the Federal Reserve Banks are United States government institutions, they are not government institutions, they are private credit monopolies.”
United States Congressional Record, 11 May, 1972.

“I am afraid that ordinary citizens will not like to be told that the banks can,
and do, create and destroy money, and they who control the credit
of the nation direct the policy of governments.”
Reginald McKenna, Chairman of Midland Bank of London

“Banks lend by creating credit. They create the means of payment out of nothing.”
Ralph M. Hawtery, Former Secretary of the British Treasury

“Of course, banks do not really pay out loans from the money they receive as deposits. If they did this, no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits to the borrowers' transaction accounts. Loans (assets) and deposits (liabilities) both rise by the same amount.”
Modern Money Mechanics, Chicago Federal Reserve

“The modern banking system manufactures money out of nothing. The process is perhaps
the most astounding piece of sleight of hand that was ever invented.”
Major L. L. B. Angus

“Commercial banks create checkbook money whenever they grant a loan, simply by adding
new deposit dollars in accounts on their books in exchange for a borrower's IOU.”
Modern Money Mechanics, Federal Reserve Bank of Chicago, page 19.

“By a continuing process of inflation, they can confiscate, secretly and unobserved, the wealth of citizens-- and not one man in a million will detect the theft.”
John Maynard Keynes, Father of “Keynesian Economics”

“The process by which banks create money is so simple that the mind is repelled.”
John Kenneth Galbraith, Money: Whence it came, Where it Went, page 29.

“Every effort has been made by the Federal Reserve Board to conceal its powers, but the truth is the Federal Reserve System has usurped the government. It controls everything in congress and it controls all our foreign relations. It makes and breaks governments at will.”
Louis McFadden, Chairman of the House Committee on Banking and Currency

“The commercial banks and the Federal Reserve create all the money of this nation,
and its people pay interest on every dollar of that newly created money.
Private banks exercise unconstitutionally, immorally, and ridiculously,
the power to tax the people, for every newly created dollar dilutes
to some extent the value of every other dollar already in circulation.”
U.S. Congressman Jerry Voorhis

“When you or I write a check there must be sufficient funds in our account to cover the check, but when the Federal Reserve writes a check there is no bank deposit on which that check is drawn. When the Federal Reserve writes a check, it is creating money.”
Putting it Simply, Boston Federal Reserve Bank

“The regional Federal Reserve banks are not government agencies, but are independent,
privately owned and locally controlled corporations.”
Lewis vs. United States, 9th Circuit Court, 1982

“All the perplexities, confusions, and distresses in America arise, not from defects in the Constitution or confederation, not from want of honor or virtue, as much as from
downright ignorance of the nature of coin, credit, and circulation.”
John Quincy Adams, Sixth President of the United States

“The eyes of our citizens are not sufficiently open to the true cause of our distress.
They ascribe them to everything but their true cause: the banking system--
a system which if it could do good in any form is yet so certain of leading to abuse
as to be utterly incompatible with the public safety and prosperity.”
Thomas Jefferson, Third President of the United States

“You are a den of vipers and thieves. If the American people only understood the rank injustice of our money and banking system, there would be a revolution before morning.”
Andrew Jackson, Seventh President of the United States

October 6, 2008 | Unregistered Commenternamerequired

For the people who want to get acquainted with money master manipulation, please view the following video.
http://video.google.com/videoplay?docid=-515319560256183936
Its a 300 year manipulation span. View this 3.5 hours video and you will have a different view on the world economy.

After this you should watch: www.iamthewitness.com
It gives you a (long) article about the Jewish Rothschilds family who can partly be held responsible (in my viewpoint) for all the mayhem in the world today, especially in the Middle East.

Money remains Power.

October 6, 2008 | Unregistered Commenterde Graaf

Team, Thanks for all your input, it is very much appreciated by us. Please keep it up!

October 6, 2008 | Unregistered CommenterGold Prices

The Fed article was good. I assume most of the people reading your column know about the Fed scam anyway, but it never hurts to keep putting the truth out there repetitively. The mass media uses repitition to condition the masses to buy beer, or whatever else they want to do. Corporations would not pay one million dollars per minute for commercial time during football games if commercial advertising wasn't persuasive.

The definitive book on the Fed is Secrets of the Federal Reserve by Eustace Mullins. Many other books on the Fed are plagiarized from this book. For those interested in the Fed, this book is a must read.

Without the creation of the Federal Reserve banks in 1913, America could not have funded and would not have entered World War One. The Federal Reserve bank regions supercede state boundaries, and so set up a supernational government in the United States. In the 1800's this was referred to as the Invisible Money Power. We have not had Constitutional government in America since 1913.

October 6, 2008 | Unregistered CommenterAnon

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