Article Image Ernest Hancock
Letters to the Editor • Federal Reserve

The Truth About The Fed That Hurts

 Dear Ernie,

I could understand why on June 24th, 2009 withdrew from public viewing the two research-backed opinions I wrote about the Fed, namely:

I. Who Said Federal Reserve Is A Private Banking Institution?

II. Federal Reserve Is “Private” Institution

Run By “Thieves” Is A Dangerous Lie.

Dr. Ron Paul, a known Libertarian, is leading the campaign to abolish the United States Federal Reserve, which according to him and his followers is a private institution run by “thieves”. He is supported by Paulian worshipers and his libertarian agenda is promoted by

The titles of the withdrawn editorials alone are enough to upset Paul’s followers – especially those who feel deeply for him and couldn’t think deeper on the adverse implication of his campaign or could not see and admit that the Fed is not a private but a federal, public institution.

The choice between giving the public the rare opportunity to see the truth that the Fed is a public entity thereby undermining the basis of the anti-Fed abolition campaign that it is a “private” banking agency run by “thieves” on one hand, and suppressing the truth to protect Paul’s public image on the other, is not an easy decision for you to make. You chose the latter.

I respect that. As I said I understand. This is your website, and I do not question your right of ownership as to what extent you are going to use it, to promote your own personal and public purposes.

But I do support your public purpose – and that is to provide the public a venue of free expression. That’s why I am here.  It is from here that the legendary Phoenix surges back to life … to rise to the immeasurable height of freedom from the ruins of dictatorship, from the stranglehold of despotism and intolerance, and to be free of government censorship that wilts life itself.  You and I are parallel in this destiny -- to fight and die for freedom.

The purpose of this letter which I hope you will publish is to let you know that I have never attacked or criticized Dr. Ron Paul’s person. I admire his private person, just as I love my son, a very loving and humane person, which is a gift to humanity.  I only disagree with his publicly declared economic and political philosophies as we search for a true leader this country can rely on in times of bliss and crises.

Also to let you and our reading public know that the withdrawn pieces are in my log-in file, complete with a truckload of angry comments of those in the campaign trail to abolish the Fed.  They appeared to be deeply hurt by the articles – actually seemed severely wounded by the truth they saw for the first time that the Fed is not a private entity that they had been led for so long to believe.

Since the withdrawn Fed articles and this rain of vitriolic comments are only accessible to me, I am the only one who sees the axe before it drops and slices the flesh.  I think you designed it this way … to shield my agony from public viewing, and to send me the unspoken message that full reading of the expose’ is not welcome in this site, even though it is a great opportunity for any reader to know that in those written editorials lies the erstwhile one-time reality or the only hidden truth, about the Fed.

There is nothing mean-spirited in those hurtful comments that I have not anticipated.  I said so myself right in the articles itself. Those who feel deeply for Paul and cannot think as deep as their feelings, as to what his politics and economics mean to the country, will immediately dive into personal attacks right after they read the expose’, throwing the author to the shredder and make mincemeat out of his person.  The can only do so because it is all feelings – nothing above the chest, or anything academic about it, beyond those emotions. Thus I do not bother myself wasting my time in answering them.  I have lost any desire to give the light of knowledge and understanding they sorely needed, especially to those who could no longer be helped.

I noticed that among those spiteful comments, only Powell Gammil is having a ball out of those printed personal abuses – he said so himself that he enjoyed it.  However, he is the only one that defends from being dragged down to the gutter as a result of “ad hominum” attacks that were allowed in print against the person of the writer – which obviously he believes is not good for a freedom site. 

“Comment by: Powell Gammill 
Entered on: 2009-06-24 21:58:01

“Ad hominum attacks do not do anyone justice on FP.  Edwin may very well be fluent in English as a second language as he is from the U.S. Commonwealth of Puerto Rico.”

I would not even comment on what Gammill said about myself. Gammill is obviously not one of them.  But here’s a tap on the head: Terrorists who attacked my English only know the English of terror.  What English are they talking about other than their own?  If they can show several journalism awards of excellence like I have, then perhaps they have a redeeming quality to be saved from the firing squad.

Yours truly,

Edwin A. Sumcad

Editors Reply

Free-Market advocates _know_ that the Federal Reserve isn't a free-market entity. Try to compete with something else (even backed by precious metals) and you'll get a jack-booted understanding of how the money monopoly really works.
FreedomsPhoenix' editorial policy is pretty much whatever Powell and I say it is. The overwhelming principle is to allow for free expression of opinion. The structure of the site allows the readers to easily avoid writers that they have learned are Brain Drains and a waste of time.
However, for those hoping to take advantage of the opportunity to make their opinions clear on a particular subject using the writings of another is stimulating to many. For new readers, they can only get the 'Free flow of ideas' concept over time and the comments section helps them speed this process up.
Your article is still on the front page at the bottom in the Opinion and Article section. And you'll notice that we reformatted the site so that the comments show up on the same page opened to the original article. This change was motivated by you and others that would use FreedomsPhoenix to promote their writings without any say from the readers of the site about what you have to say.
Soooooo, this change allows for you to share your writings while the site readers are able to provide their comments on what was shared.
Of all of the postings that you have made on this site I have read maybe the first two... I get it :) But the comments are always entertaining.
Most of the awareness I have of your postings is due to the emails I get wondering why I would allow your work on FreedomsPhoenix in the first place. But then I get some of those emails about others' writings that I personally like. So I do my best not to make any more of a judgment other than how long I allow the piece to be on the front page and how high on the front page. Very rarely to I just delete a posting. I think that I have done that maybe 5 times over almost 5 years and 60,000 entries.
It wouldn't surprise me if one of your writings were one of them but I usually target for deletion the stories that are superficial and full of useless personal attacks that are without a meaningful purpose.
Privately to my friends and supporters I do my best defending the publishing of your work... "for the entertainment and education of our readers about the thought process of people that support (fill in the blank)"
I'm sure that there may come a time that we will be more selective due to an over whelming volume of entries (we are already at two daily editions - and I doubt we'll go to a regular 3rd edition) But for now I hope to keep the site open to those that are very counter to the opinions of our editors and the majority of our readers.
Your opinions are... well, you are the one that has to defend them in the open here. And that is the only way that they are ever going to appear on this site... in the open, surrounded by the comments of others about what you had to say.
Now don't make me have to read all of your stuff,... depending on my mood, I just might hit the delete key :)

6 Comments in Response to

Comment by Edwin Sumcad (15723)
Entered on:

 Brock, you can't miss if you say that Jet has a strange childhood. In his comments he usually exemplifies this kind of bitterness that psychologists would normally trace to an early upbringing of a child -- maybe a dysfunctional childhood.  I am not saying that this is true to this personality in question.  Anyone who wants to know can source this in the Internet. Besides, my commitment is not to attack the person of the writer, not matter how tempting it turns out to be.



Comment by Edwin Sumcad (15723)
Entered on:

To Ernie,



     This observation you posted attracts my attention because it is a sample of a legitimate response that doesn’t resort to a hammer and tong attack of the emotional on the person of the writer even though you don’t like or against the writer’s opinion [I hope this model is fair enough for others to learn from and follow on how to react to contrary opinions in a civil manner without necessarily indulging in savage name-calling and mudslinging]:


      “Free-Market advocates _know_ that the Federal Reserve isn't a free-market entity. Try to compete with something else (even backed by precious metals) and you'll get a jack-booted understanding of how the money monopoly really works.”


      That the Fed “… isn’t a free-market entity” … [I described lengthily in the articles itself the structural-operational identity of the Fed banks under the Federal Tort Claims Act that they are not], is partially correct, but only to the extent that its governmental functions created by Congress are supervisory and regulatory.


       When profit-motivated greed leads the powerful to control and monopolize the industry, the Fed intervenes using its supervisory and regulatory power to see to it that the market system is free of monopoly. With this required “intervention”, it is the Fed that makes the market free.


This is not even my call.  It is Adam Smith’s.


      Neither is it the call of free market advocates whose struggle is just narrowed down to the pursuit of profit using the Neumann-Morgenstern’s Theory of Games where players strategically cabal to increase their joint pay-off … but rather the call of learned macroeconomists to declare and let the public know the need of the Federal Reserve that implements fiscal and monetary policies – the Central Bank like every civilized nation have, which is the backbone in the grandiose plan for socio-economic development, especially in a free enterprise society like ours. Like the few others in this economic discipline, I would have wasted my time in graduate school if this is not true.


      But any required federal “intervention” was the first shot that attracted Libertarians to a war with any interventionist government.  I should no longer wade into the deep waters of this on-going war on idealism for it would only detour away from the simplest issue at bar as to whether or not the Fed is a public or a private entity.


      It is quite a stale argument for me to hear that our great forebears brought us freedom – a Libertarian battle cry I too cherished. But the argument has forgotten that our forefathers also brought us Government – the kind we chose under the concept of freedom and liberty, that we alone should govern ourselves, not the Crown of England.


      Why our great forefathers needed a Government so different from the rest – especially the kind they forged in the anvil of a bloody revolution – is I think not that too difficult to understand.


      If anarchy is the price of absolute freedom, then we cannot afford to lose our freedom and liberty to anarchy … to disorder and chaos, just because there is no governing authority to pull us through. 


      We may revolt against a totalitarian authority, but it should not be just a revolt against authority.  A revolution just for its own sake, would stir our forefathers in their grave in protest for misinterpreting their legacy of liberty and freedom and exhibiting it only in the museum of the vain and in the spatial void of the mind.


      I would like to respond to a couple of comments that I could not support my position in the published editorial report that the Federal Reserve is a government institution created by Congress.


      Below are the declarations of the high courts that the Fed is government entity.  I want them to know the truth.  I did not make it up.  It is not even mine.


      If upon knowing the truth it created a shock, the outraged should take a deep breath and stay cool.  Barking at the wrong tree usually triggers a high blood pressure right after discovering that it was the wrong tree.









Know the Truth



Those who do not want to be denied the truth that the Fed is a public entity, can read the Lewis case.



It is not I but the high courts who said that the Fed is a public, not a private institution, except only when a tort claim is filed against the employee of a Federal Reserve bank, when the Fed regional banks are ruled as private, not public, entities.



Here are the high court cases declaring that the Fed is a government, not a private, institution – the truth that hurts.



Brinks Inc. v. Board of Governors of the Federal Reserve System, 466 F.Supp. 116 (D.D.C.1979), held that a Federal Reserve Bank is a federal instrumentality for purposes of the Service Contract Act, 41 U.S.C. § 351.



U.S. Supreme Court, Dixson v. United States 465 U.S. 482 (1984) 465 U.S. 482. 

Under the Federal Bribery Statute, a public official is defined to be liable for bribery.  It is a U.S. Supreme Court dictum superior to any court of the land under the Federal Bribery Statue, which is directly opposed to the 9th Appeals Court’s judgment in Lewis case that a Fed bank employee is not a public official under the Federal Tort Claims Act.



In United States v. Hollingshead, 672 F.2d 751 (9th Cir. 1982), this court held that a Federal Reserve Bank employee who was responsible for recommending expenditure of federal funds was a "public official" under the Federal Bribery Statute.



The Reserve Banks are deemed to be federal instrumentalities for purposes of immunity from state taxation. Federal Reserve Bank of Boston v. Commissioner of Corporations & Taxation, 499 F.2d 60 (1st Cir. 1974), after remand, 520 F.2d 221 (1st Cir. 1975); Federal Reserve Bank of Minneapolis v. Register of Deeds, 288 Mich. 120, 284 N.W. 667 (1939). The test for determining whether an entity is a federal instrumentality for purposes of protection from state or local action or taxation, however, is very broad: whether the entity performs an important governmental function. Federal Land Bank v. Bismarck Lumber Co., 314 U.S. 95, 102, 62 S.Ct. 1, 5, 86 L.Ed. 65 (1941); Rust v. Johnson, 597 F.2d 174, 178 (9th Cir. 1979), cert. denied, 444 U.S. 964, 100 S.Ct. 450, 62 L.Ed.2d 376 (1979). The Reserve Banks, which further the nation's fiscal policy, clearly perform an important governmental function. #




Comment by Jet Lacey (17811)
Entered on:


Childhood?  What ever do you mean, Sir?  I think The Grateful Dead say it best:  "What a long, strange trip it's been."  

Comment by Brock Lorber (11655)
Entered on:

Jet, you must have had a very strange childhood. 

Comment by Jet Lacey (17811)
Entered on:

Jesus H. Christ. 

I get so sick and tired of these, dare I say 'authors', who post opinions on Freedom's Phoenix that are better suited for (the CFR Journal) Foreign Affairs in order to get a rise out of the readership.  Then, to make matters worse, they bleat like the sacrificial lamb when they get a heaping dose what they are ultimately begging for.

There are many of us that actively try to ignore you, but oftentimes you simply will not allow us to.

Say what you're gonna say and write what you're gonna write, I'm all for that; but for God's sake quit whining like some sad-sack, "woe is me" child that got busted for finger-painting in their own feces. 

It's your shit; OWN IT.         
Comment by Dave Hodges (5367)
Entered on:

 I hope Ernie leaves your article on the Fed, which proclaims that FED is not a privately run organization, on the site in perpetuity. 

Your article serves as reminder of the volume of work that Dr. Ron Paul and others in the movement have to left to do in the name of waking the people up to the profound abuses which presently plague the American people.