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*Note: For more information on the Federal Reserve System, check out the short / free book "Meet The System


A visitor to the site wrote me about, for lack of a better term, Federal Reserve System "supporters." He was looking for information that would help him prove "The Fed" exists to benefit bankers (at the expense of the rest of us.) 

Specifically, he wanted to know whether I had information that proved people within The Fed have a "conflict of interest." (So, as an example, if I could show that the Fed Chairman was connected directly to a specific commercial bank, that would be a "smoking gun" that Fed supporters couldn't ignore.)  


This post below is based on our exchange


From the first email:


"I'm not clear on what the connection is between the Fed and the commercial banking interests (both in historical and modern times), and how the Fed benefits when these commercial banks earn interest."

It isn't so much that the "Central Bank" itself (The Fed) benefits when the commercial banks earn interest...let me know if this helps.

Think of "The Fed" as an institution that determines "the rules" of the United States banking system. (Easy enough.) But who drafted the legislation that led to the creation of the Fed? The answer is: An elite / powerful group of commercial banking interests.

This being the case, you would expect "The Fed" (and the commercial banking interests that created and control the system) to "write the rules" in a way that benefits them. And that is exactly how it works.

When The Fed creates a $1 billion dollar loan for the US government, that money eventually finds its way into the commercial banking system. -That $1 billion dollars (going into the commercial banking system) is the first benefit that the commercial banks enjoy. But it is small compared to what happens next.

Based on "the rules" (as they're currently written) the commercial banks are allowed to use that $1 billion as reserves out of which they're permitted to create an additional $9 billion in loans. -In other words, that is where the commercial banking interests make their money...on the $9 billion in loans that they're allowed to create. (The first billion that was loaned to the government serves as the catalyst. It's what follows that $1 billion loan that really matters to the commercial bankers.)


"Does the Fed get U.S. taxpayer money to pay for its operation or are the operating expenses completely taken care of by the interest earned from Treasuries?"

Well, I suppose that depends on how you look at it. In theory, "The Fed System" is self financed. However, in practice, whenever the system runs into trouble, it is the taxpayers who "bail it out." (And even that is being "kind." ...The Fed's primary source of revenue is interest on government securities...who pays that interest? We do.)


Second Email:


(Summary of question) "Yes, I know about the fractional reserve system, where commercial banks would earn money on $1B that the Fed created, and how the rules allow said banks to loan out another say $9B and earn interest on that. ...but I don't see the connection on how when the commercial banks benefit, the Fed also benefits. ...if I don't have a list of names of Fed owners who also own commercial banks, it would be difficult to convince a skeptic that the Fed is operating with an ulterior motive."



Why not just concede to "the skeptics" that "The Fed is a benevolent not for profit organization that only has the people's best interests in mind"? Does that statement undo the damage that Fed Policy has caused in our economy? 

Which is more damning: Showing the average citizen that JP Morgan and Rockefeller helped create the Fed (and now JP Morgan Chase and Rockefeller's Citigroup are using their influence to bankrupt and buy up competitors) or showing the average citizen HOW "fractional reserve banking" steals wealth from their pocket and puts it into the pockets of the bankers? (-And that it is The Fed, as a matter of policy, that facilitates the theft...)


I'm just saying: A good prosecutor picks out the best evidence to make his / her case. The real "case" to be made here (in my opinion) is that our fractional reserve banking system is a predatory and dangerous system. It benefits the few at the expense of the many and it is "The Fed" (sitting at the top of the banking system) that directs everything. All the evidence needed to make this case is readily available.


...apologists can ALWAYS deny the nefarious "intent / motive" of those running the Fed...but in the end, it isn't theclaimed intent / motive that matters; it's the results. (The Fed Chairman might really believe in the system and he might pull all the levers and push all the buttons he thinks he's supposed to. Or, he might know EXACTLY what he is doing; he might know exactly who it will hurt and who it will benefit. In the end, that isn't the main issue. What's most important is that he not have the power, as a believer or conspirator, to do it.)


That said, if you're really set on getting into the history of those running "the system" I'm sure you can find plenty of interesting stuff. Start looking people up (board of governors, open market committee members, regional bank directors, etc.)  -And, if you've read my book, you'll know that connections to the CFR, IMF, World Bank, and tax-exempt foundations shouldn't be taken lightly.

Third Email



"...I've already have gathered a great deal of evidence on other reasons to oppose the Fed, but haven't yet found much info on the Fed/commercial banks tie in, which in my opinion is a smoking gun."



That's fine - just don't let the skeptics divert you away from the strongest arguments against the system itself.


For instance, assume you dig up a link that shows The Fed Chairman has massive connections to banking interests...apologists for the Fed will simply reply with: "The Fed Chairman needs to be replaced and Congress needs more oversight." (Finding corrupt people in the system will never convince most Fed supporters that the "system itself" is the problem.)

That said, I thought of the following analogy to use on "skeptics" who insist there is "nothing wrong with the Fed" so long as the highest officers have no "traceable conflict of interest." (The system was founded on a conflict of interest - it makes no difference who runs it. Maybe this will help illustrate that.)   

Pretend that I own private prisons. Without a doubt, the best "prisoners" are pot heads. (They're non-violent, will work for .10 cents per hour on products and services that I can sell at full price, and they're actually GOOD at the work they do.) Best of all, the State pays me the same amount to house pot heads as it does to house other (more violent and less productive) "felons."   

Clearly, I'd be thrilled to have a "system" in place that funnels as many pot heads as possible into my private "for profit" prisons. So, I lobby the government for tougher laws on marijuana. (Or better yet, I actually write the legislation myself and use the billions I've already earned to make sure it gets passed.) 

My legislation creates "The Federal Marijuana Combat Agency."   The "mission statement" of the FMCA is to "protect the citizens" from "criminals who use and deal a drug that threatens our national security."  The FMCA "determines sentencing guidelines" and is in charge of "getting marijuana criminals off the streets and into prisons where they belong."   

Now, to conceal my "conflict of interest" I'll make sure that nobody ever knows I wrote the legislation. Additionally, the legislation that I WROTE MYSELF will clearly state that the "Chairman of The Federal Marijuana Combat Agency cannot have any ties to the prison industry." (Kind of like The Fed Chairman isn't allowed to be an "officer or director of any bank, banking institution, trust company, or Federal Reserve bank or hold stock in any bank, banking institution, or trust company...") 

In the end, my "official" role in the new agency means nothing to me. As long as the agency exists, (and as long as I hold sway over the government that put it in place and KEEPS it in place) I benefit from it just the same.   

To be clear, I believe the powerful banking interests that created the Fed still control it - but even if they didn't still control it, they continue to benefit from it. (To me, the strongest case against the Fed is its destructive policies.) 

That said, I know that others have dug into this - I can't verify the accuracy of the information I've seen, but it's out there. Here would be one example: 


Chart 1 reveals the linear connection between the Rothschilds and the Bank of England, and the London banking houses which ultimately control the Federal Reserve Banks through their stockholdings of bank stock and their subsidiary firms in New York. 


The two principal Rothschild representatives in New York, J. P. Morgan Co., and Kuhn, Loeb & Co. were the firms which set up the Jekyll Island Conference at which the Federal Reserve Act was drafted, who directed the subsequent successful campaign to have the plan enacted into law by Congress, and who purchased the controlling amounts of stock in the Federal Reserve Bank of New York in 1914.--Click Here to view charts

Hope this helps,
Joe Plummer

Posted 12.1.2008
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