Guest Post: The 10 Things That Would Be Different If The Federal Reserve Had Never Been Created

Tyler Durden's picture

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mynhair's picture

'We allowed the Federal Reserve to be created in 1913 and we have allowed it to develop into an absolute monstrosity over the past century.'

Geez, dude, I'm not that old.....

MarketTruth's picture

Apologies to all for hopping to the top yet a HUGE FACTOR that seems to be ignored is that the Federal Reserve is owned privately by members that include JP Morgan. So how has the private Fed helped one of their owners  JP Morgan to control markets, maintain a plan by the elites, etc via money creation/profits?

Malcolm Tucker's picture

Excellent cartoon about "The American Dream"! Full of references to banksters, the FED, fractional reserve lending, gold, etc....

http://fedupmontrealer.blogspot.com/2011/01/american-dream-cartoon.html

 

KickIce's picture

Very good.  They certainly dealt with them much more effectively in the past.

More Critical Thinking Wanted's picture

 

LOL, the logic behind this whole article is a massive FAIL of epic proportions.

Lets start with bullet point #1:

If the U.S. government had been issuing debt-free money all this time, the U.S. government could conceivably have a national debt of zero dollars. Instead, we currently have a national debt that is over 14 trillion dollars.

Besides the inaccuracy of the debt figure (what's a trillion amongst friends?), what would happen is what happened for hundreds of years in various countries all around the planet:

governments (or ruling monarchies) got indebted just as much, sometimes catastrophically, but not to the 'Fed' or 'investors' but to a select few merchants and other rich creditors and other countries.

Those creditors had undue behind-the-doors influence over the policy of those countries and were often the real rulers of those countries. Ask the Hansa.

And yes, those countries were on the gold standard and did not have any central banks - and yes, the results were often catastrophic to citizens.

So yes, if you want to sign away your rights and freedoms as a country you need to do nothing else but elect Ron Paul, abolish the Fed and let the US get indebted towards rich (and unregulated) mega-corporations only, and let US politicians run to them for bail-outs instead of to the printing presses.

That will work out fine I'm sure :-)

Really, has ZH become a propaganda site for TBTF banks, to spout such obvious nonsense?

 

AnAnonymous's picture

if you want to sign away your rights and freedoms as a country

 

So now countries have rights and freedoms?

 

This said, where is the difference from the past models and today?

Because this diatribe can be sumed up as just this: we are not worse than the others guys we used to describe as the worst things on Earth.

Does not make the US better, though. Contrary to what was allegedly proclaimed at start.

More Critical Thinking Wanted's picture

 

Because this diatribe can be sumed up as just this: we are not worse than the others guys we used to describe as the worst things on Earth.

It can be summed up as what it said, that item #1 of the article is a false premise already. It gets worse with the other 9 items :-)

One of the more hillarious concepts in the article is the term "debt-free money".

Is the author aware of the plain fact that all forms of money are proxies for promises and are as such instruments of debt? That includes gold coins.

There are very few real examples of "debt free" economies - stone-age barter economies mostly. You know about 'stone money', right?

Barter works in small communities but the pricing is extremely inefficient as the pricing matrix is NxN instead of 1xN. As a result of that inefficiency professions that produce common goods are extremely profitable (blacksmiths, millmen, etc.) and 'rare' skills and professions are under-paid, starving or outright not existing.

All in one pure barter economies were not very good at general scientific progress - and it's no accident that the introduction of central money and more liquid investments brought perhaps the biggest advances in productivity since the dawn of humans and brought the biggest jumps in the standard of living of most developed nations.

The rest of the randpaulesque visions present in this anti-Fed article can be debunked with similarly easy strides. That guy was a genius when it came to choosing rich parents, but he came up short when it came to brains ...

 

Womb Service's picture

One of the more hillarious concepts in the article is the term "debt-free money".

 

The only epic fail is yours. You can't see the difference between payment in full and a phony warehouse receipt?

Willful blindness or just a plain old troll?

RockyRacoon's picture

Uh.  Let's go with troll.  Do I win something?

More Critical Thinking Wanted's picture

 

You can't see the difference between payment in full and a phony warehouse receipt?

Payment in full with what? With a piece of paper, promised by someone to mean something? With some bits twiddled in a computer, promised by someone to mean something? With a piece of metal, promised by someone to mean something?

You need to realize that there is no such thing as 'debt-free money' - it's an oxymoron. There's always a promise involved somewhere, somehow, by some entity.

You'd have to define your terms more precisely and make them less of an oxymoron to have a coherent argument :-)

But I expect only the cricket chirp - why should I be expecting consistent, logical arguments from monetarists?

 

Pegasus Muse's picture

Worth watching:  G Edward Griffin, Creature from Jeckyll Island (A Second Look at the Federal Reserve)

http://video.google.com/videoplay?docid=6507136891691870450#

 

Zeitgeist II Addendum (Full Movie)

http://www.youtube.com/watch?v=1gKX9TWRyfs 

Hammer Down's picture

I read this book a while back - truly eye opening.  Currently working on The Mystery of Banking by Rothbard which is equally impressive.  This may be a little off topic, but I saw recently that Basel III will require liquidity requirements in addition to capital which will raise the required treasury holdings by something like $4T.  Being sold as more protection, but looks to me like a new way to increase treasury demand and keep things afloat for a little longer.  This is my first post by the way - pleasure to be with you all (most of you anyway.)

flacon's picture

Welcome, Hammer Down. 

 

I am a huge Mises fan. 

Midas's picture

Welcome to the fight club.  Make sure you junk HarryWanger on the way in.

Dismal Scientist's picture

Then you're missing the point deliberately, I assume. How hard do you think the bankers of early 20th century lobbied for creation of the Fed, and control of the money supply? As if their future generations were at stake, of course. It was a no brainer...

AnAnonymous's picture

People make too much of the 1913 year decision.

Pyramiding debt was not new in human history. If you look at it, two groups emerge: one group that was wary about pyramiding debt and another that was eager of exploiting pyramiding debt.

The last group won over the first.

The 19th century US growth was built on pyramiding debt (against Indian lands)

Usually, the way out of a debt scheme is to build a bigger debt scheme.

All it shows is that people in 1910 knew what was going on. It does not signal the start of all.

Salinger's picture

cross post

 

Fed Govenor Fisher (Wednesday jan 12) talks about congress and its role:

Those lawmakers who advocate “Ending the Fed” might better turn their considerable talents toward ending the fiscal debacle that has for too long run amuck within their own house. The Fed does not create government debt; fiscal authorities do. Deficits and the unfunded liabilities of Medicare and Social Security are not created by the Federal Reserve; they are the legacy of those who control the purse strings?the Congress, working with the president. The Fed does not earmark taxpayer money for pet projects in local communities that taxpayers themselves would never countenance; only the Congress does that. The Congress and administration play the dominant role in creating the regulatory environment that incentivizes or discourages job creation.

...

I think I have said enough, if not too much. In the musty, time-honored tradition of central bankers, I am now happy to avoid answering any questions you might have. Thank you.

http://www.dallasfed.org/news/speeches/fisher/2011/fs110112.cfm

Don Birnam's picture

The Pontius Pilate response.

"I wash my hands of this matter."

DrLamer's picture

The Pontius Pilate response.

"I wash my hands of this matter."

As a strong supporter of modern Israel, the US people is about TO REPEAT the story of jews, occured AFTER the Pontius Pilate's court. After EXACTLY 40 years, allowed for appeal before God, half of jews (2+ millions) was murdered by Rome's pagans, half of them spreaded around the world for 2000 years.

It means that as of today's morning the US people is about to have been SPREADED around a globe in next 50+ years, along with his gold and silver bullions and coins.

Note: USA has no 40 years to appeal.

The crime: crude oil and computer idolatries, support of Israel, listening to false prophets, including jewish false prophets, etc.

Withdrawn Sanction's picture

The Fed does not create government debt; fiscal authorities do.

No kidding.  In a similar vein, heroin dealers do not create addiction...they merely enable it.

Fisher's response is remarkably brazen for a central banker whose entire existence is at the pleasure of those he criticizes.  He's either (a) got balls of steel knowing he's untouchable, or (b) someone's struck a nerve.  Given that bankers are neither smart nor brave, I'll say it's (b).

(Thanks for the link.)

Rainman's picture

.....one smart, uber-strong organization can lasso 500 or so critters easily. Besides, the soldier banks are out there spreading the electoral fiat grease. Who is to question the abnormal becoming normal...?

trav7777's picture

Fed governors certainly act with the air and demeanor of a Senator, and Greenspasm as if he were VP or even co-President during his stint as Chairman.  The Bernank has the deer in headlights look when he really should be behaving during these hearings as if he is doing them a favor by allowing them to speak directly to him.

Salinger's picture

just checking out your site now - how come your not on Tyler's blogroll?

buzzsaw99's picture

We never get on the good blogrolls. I have friends who would like to be on there too. lol

 

Actually this is the first link I have ever left here so it isn't anybody's fault really. Thanks again for the speech link.

Waterfallsparkles's picture

Bravo.  That is the point.  When the interest is not also created it is taken out of the Economy.  So you  have 100 dollars put into the economy at 10% interest 110% comes out of the Economy.  Until there is nothing left.

Bankers win everyone else is a debt slave forever.

A_MacLaren's picture

Bankers win everyone else is a debt slave forever.

Precisely.  Steve Keen has modelled this outcome and has been presenting it to those who will watch, listen and understand. 

 

Why credit money fails

 

http://www.debtdeflation.com/blogs/2010/11/15/why-credit-money-fails/
hugovanderbubble's picture

+1

 

Thanks for ideas,

Whats a pity the big IF...IF the Fed... Who audit the fed? who control the SEC? Who Audit the IMF? who audit WB?Wjo audits the NATO ? Who controls the ONU?....Who controls and audit the BIS?...

The system is a smokescreen of a toxic submarine going nowhere.

"In Strict Sense the Fed is not bad, is just the way they manipulate the market for Permabullisment"

Waterfallsparkles's picture

As I have said before.  If I could create Money from 0 and collect interest on that Money from 0, I would print as much Money as I could.  What if I could print 2 Trillion Dollars from 0 Capital and give it to my Banker friends.  I could then receive interest on the 2 Trillion Dollars I just gave away.  I would not have to worry because the American Tax Payer and all of their Children would have to pay for the Money I printed plus all of the accumulating interest.  I would be in 7th heaven.

Yep, print Money give it to my friends and have someone else pay for it.  That sounds like a good plan if I could get away with it.

The best part is that the Americans would never be able to repay me, so I will collect interest forever on capital created from 0.

damnitalready's picture

Not to mention stealing, err, foreclosing on the borrowers real property when they default on the loans... sounds like you have yourself a pretty good racket there.

When you put it in that light, though, makes you wonder what the hell congress was thinking to let this monstrosity be created...  I mean, how much cocaine was flowing through the halls of congress in 1913?

Enraged's picture

I believe the only hope we have remaining is Ron Paul against Zimbabwe BENdover to end this horrible nightmare.  This may be the most important battle of all times to save the U.S., before the revolution against the banksters.  

the rookie cynic's picture

The Federal Reserve runs this place. It's the ultimate Ponzi-debt-pyramid-scheme from hell. In case you were unaware: you are at the bottom. Sucks to be you.

NotApplicable's picture

#11 Pennies would be made out of copper, and still have value in our economy.

Waterfallsparkles's picture

As far as Income Tax goes.  Being the Income Tax and the IRS was established at the same time as the Federal Reserve.  I also agree that there would be no need for an Income Tax.  The Income Tax which is collected thru the IRS a branch of the Federal Reserve is only to collect the interest on the Debt that the FED has created for 0.  So, in effect we pay a tax on Money that was created from 0 to the Banks of the Federal Reserve.  What a deal.  Think about that when you write your next check to the IRS.

Makes you wonder why you should owe a tax on Money created from 0 when there was no actual consideration for the Debt or the interest.

Waterfallsparkles's picture

After thought.  If the FED prints Money from thin air.  There is no consideration for the Money they print.  Without a Consideration there cannot be any Debt.  There has to be a Consideration for a Debt to be valid.  Without Consideration does anyone owe Income Tax on a Debt that is not valid?

Matto's picture

I just finished reading ellen hodgkin browns Web of Debt which is a great non-technical primer on this topic. 

 

At one point she mentions a study on income tax - that 1/3rd is wasted in collection & administration of the tax law, 1/3 in paying fed debt and 1/3 in lost productivity/disincentives.

wherewasi's picture

 

I'm not smart enough to know whether or not the FED is the right way to go for the money supply.  But I can't help but wonder WHY we (the sheeple) pay interest on money thatis created literally from nothing.  And then the sheeple have to also pay for the printing of the cash in circulation.  How the f*&^ is that possible?  Who made THAT deal?

1fortheroad's picture

WOW, at least one person on this list has a working brain.

tbd108's picture

"Socialism (or Fascism for that matter) only takes meaning at the point of a gun." (per Mao). That's your consideration.

gwar5's picture

We can end the Fed, congress can do it. But politicians are captured with their personal golden tickets.

The American people did not allow creation of the Fed. They didn't want the "Money trusts" to form a Central Bank, but it was done in the dead of night on a Christmas Eve with most out of town. 

It was formed by the old "money trust" banks of the monopolies of JP Morgan and the usual suspects that people didn't want. It was disguised as the "Federal Reserve Bank" -- I think everybody here is already aware of the fraud

The cartel seeks to solve the American debt problem and get their money through selective euthanasia of the baby boomers.

Who knew there was big money in Socialism after all?

Judge's picture

Actually more bad fiction.... You need to take five minutes and actually research the vote on the FRA - it passed overwhelmingly and not in the 'dead of night."  That's just more fiction from Jekyll island....

The people did want the Fed b/c they were tired of the corrupt politicans controlling the money supply for their own gain.  The goal was to find men of sound judgement - appointed by the president and approved by Congress that would then control the money supply as an agency independent of political whimsy.  While not perfect, it has greatly outperformed other systems. 

 

Simple, historical fact.

1fortheroad's picture

You are just a simple asshole, eat shit and die you fucking moron.

Yes I did junk you, you fucking troll.

 

Judge's picture

Lol... that's as witty as it is intelligent.

Well, I guess if you can't discuss the facts, that's all morons are left with.

 

 

Rick64's picture

 Acually there were two bills (Aldrich and Robert Owens) Aldrich's plan wasn't very popular whereas Owen's was, and they kind of meshed the two together so one could argue that they pulled the same tricks back then as they are doing today.

   The primary difference between the two bills was the transfer of control of the Board of Directors (called the Federal Open Market Committee in the Federal Reserve Act) to the government- wikipedia . This was in Owen's bill.

  Successful??  The FED was enacted in 1913 and the Great Depression was in 1929, the worst financial catastrophe in our history. The biggest unemployment in our history ( part of the FEDS mandate is to control unemployment). There were many a crisis that they didn't prevent. How about the present day crisis, why didn't they prevent this one (After 98 yrs you would think they might be better at their job)? Not only did they not prevent it, but they enabled it. Money makes the laws or buys them due to greed, that is part of human nature.

Judge's picture

The Fed didn't cause the GD, and there were several depressions on the gold std as well.  The fed DID help soften many crisis' - most recently after 9/11.  And they didn't casue this one, you'd have to go back to the 95 revision of the CRA which forced banks to make Subprime loans.

DrLamer's picture

The Fed didn't cause the GD

Yes.

The event/process/period like Great Depression can be caused only by The-Person-You-Better-Have-To-Beleive-In. The reason for that? It was A BLASPHEMY by electric coding of WORDS, a substitution of WORDS by electric coded signals. It was first in 1895 (ITU was founded in 1865, international telecomminication union), then in 1905 and finally in 1912 (ITU adopted Morse coding as a standard). The first important use of electric coding blasphemy was... Titanic's radio SOS signal in 1912.

After that God turned His face out the land of USA, and in 1913 a group of wisdom-less, half-brained senators created the FED.

Now the hexadecimal computer blasphemy, substituting the HUMAN's WORDS, is spreaded by USA around the globe.

What else about causes You would like to know?

nhsadika's picture

Is this Barney Frank speaking?

Yes, the govt made banks commit fraud on a world-wide precedent scale because we wanted a few poor folks in Detroit to have homes.  And then the govt made them build a system of MBS and derivatives around them.  And then the govt made them give helocs on shakey premises.  And the the govt allowed them to turn a blind eye to obvious liar loans.  And then the govt made them take a bailout of many trillions...

Your comments on the Fed are similarly out of touch with reality, sadly keeping the focus in the microscope (Fed easing after 9/11) you ignore the molten lava pouring into the room.

You should be banned from reality, and exiled to living in your on private lala land.

Rick64's picture

 Judge, 

I didn't say they caused it, but they enabled it and every crisis. I am not debating the gold standard, only that the FED has been a dismal failure unless you are a major financial institution.

  In 2007, Ben Bernanke suggested further increasing the presence of Fannie Mae and Freddie Mac in the affordable housing market to help banks fulfill their CRA obligations by providing them with more opportunities to securitize CRA-related loans

  Responding to concerns that the CRA would lower bank profitability, a 1997 research paper by economists at the Federal Reserve found that "[CRA] lenders active in lower-income neighborhoods and with lower-income borrowers appear to be as profitable as other mortgage-oriented commercial banks".

Sounds like the FED was onboard . Maybe the CRA revision contributed to the problem, but didn't caused it. The financial institutions went way beyond their CRA requirements.  Bundling the garbage MBS with a few A rated ones and calling it AA or AAA rated and then selling CDOs on that garbage en mass is what caused it. Who came up against Brooksley Born when she wanted to regulate the derivatives market (1998)? Greenspan- Fed chairman.  He told her that she didn't know what she was doing and didn't understand the market.  They with the help of the banks and politicians shut her down.

 Furthermore the FED controlled the interest rates and during boom times they are supposed to increase them to reduce the risk of a bubble. Interest rates were considered low during the housing boom and thus made realestate easy to sell. The FED is a bank and works for the banks.