The Federal Reserve is the central bank of the United States
and controls national monetary policy. The Fed, not to be confused with the
federal government of which it is not a part, also picks your pockets and raids
your bank accounts.
“The Constitution,” said Ron Paul in a January
11, 2010, article
, “gives Congress the authority to oversee the
integrity of the monetary unit. We have
unwisely and unconstitutionally delegated this authority to the Federal
Reserve, which has in turn devalued our dollar by 95 percent and counting.”
When the United States spends more than the tax dollars it
collects from its citizens, something it does will all too predictable
regularity, it resorts to the sale of United States Treasury Securities, the
sale of debt in the forms of such financial instruments as Treasury bills,
bonds, and notes. The various types of Treasury Securities come with different
interest rates and maturity dates, meaning when they can be cashed in.
Foreign nations and investors can only buy so many
securities and often the rate of government spending outpaces the rate at which
the government can pull money from these sources. Periodically, the Federal
Reserve steps in to quench government’s thirst for spending money.
While foreign nations and investors use money that is
already a part of the monetary system to buy their Treasury Securities, the
Federal Reserve does not. They are allowed to create money in a means similar
to the “Let there be light” mode of Biblical fame. From nothing, comes dollars.
Billions of them. Trillions of them. Though, in this era of electronic money
transfer, it may be a good long time before these mystical, out of thin air
dollars actually take the physical form of paper.
However, physical dollars or not, the Federal Reserve, which
made record breaking profits in 2009, “earns” interest on those dollars it is
Congressionally blessed with the ability to create. And, while engaged in this
process of creating money and earning interest, the Federal Reserve is
devaluing the cash you have in your pocket and reducing the worth of the money
in your bank account.
That occurs via inflation, referred to by many as the hidden
tax. Inflation is the reduction of the spending power of the dollar. Each
dollar the Fed creates makes the ones you already have in your bank account and
pockets worth less because the more dollars, now merely a faith-based financial
tool, no longer backed by hard assets, such as gold – the less value they have.
Inflation punishes savers by making their savings worth less, penalizing them
for engaging in good financial
Part of the inflationary process is the means by which this
newly created by the Federal Reserve money moves into the system, typically via
fractional reserve banking. What that means is that when that new Fed money is
deposited in banks or loaned directly to banks by the Federal Reserve Bank, the
banks only have to keep a very small proportion of the money necessary to cover
deposits, meaning that if everybody who had money in the bank wanted their money
on the same day, they wouldn’t have near enough to cover it.
The rest is loaned out, banks earning interest. When the Fed
creates a dollar, by the time that dollar winds its way through the banking
system, each bank and its fractional reserve system allowances, being lent out
again and again, that dollar has become 10 or more dollars, inflating the money
supply. The “money” in this supply, however, isn’t based on anything but debt,
money owed for loans made, often having no physical existence at all. With the
expansion of the money supply comes inflation.
What the Fed does affects you in a very real way, a way that
can clearly be measured in dollars and cents. They have power over your pocket,
yet you have no power over them. You can’t vote them out of office. You can’t
keep them from stealing your money. It just doesn’t seem right that this should
be so. Blatantly unconstitutional, clearly against the founding fathers’ vision
for America, citizens should not allow this direct theft of their hard earned money