The Federal Reserve debunked
In recent American history, remarkable and
knowledgeable authorities denounced the racket of the Federal Reserve.
Here are some of their quotes:
Patman (1893-1976) was a Democratic representative from Texas, who
served in the U.S. Congress from 1929 to his death on March 7, 1976. He
was chairman of the House of Representatives Committee on Banking and
Currency for 40 years. For 20 of those years, he introduced legislation
to repeal the Federal Reserve Banking Act of 1913.
Here are excerpts from what he said on
September 29, 1941, as reported in the Congressional Record of the House
of Representatives (pages 7582-7583):
our Federal Government, that has the exclusive power to create money,
creates that money and then goes into the open market and borrows it and
pays interest for the use of its own money, it occurs to me that that is
going too far. I have never yet had anyone who could, through the use of
logic and reason, justify the Federal Government borrowing the use of
its own money... I am saying to you in all sincerity, and with all the
earnestness that I possess, it is absolutely wrong for the Government to
issue interest-bearing obligations. It is not only wrong: it is
extravagant. It is not only extravagant, it is wasteful. It is
take the Panama Canal bonds. They amounted to a little less than
$50,000,000 — $49,800,000. By the time they are paid, the Government
will have paid $75,000,000 in interest on bonds of less than
$50,000,000. So the Government is paying out $125,000,000 to obtain the
use of $49,800,000. That is the way it has worked all along. That is our
policy. That is our system. The question is: Should that policy be
continued? Is it sane? Is it reasonable? Is it right, or is it wrong? If
it is wrong, it should be changed.
I believe the system should be changed. The Constitution of the United
States does not give the banks the power to create money. The
Constitution says that Congress shall have the power to create money,
but now, under our system, we will sell bonds to commercial banks and obtain
credit from those banks.
believe the time will come when people will demand that this be changed.
I believe the time will come in this country when they will actually
blame you and me and everyone else connected with this Congress for
sitting idly by and permitting such an idiotic system to continue. I
make that statement after years of study.
have what is known as the Federal Reserve Bank System. That system is
not owned by the Government. Many people think that it is, because it
says `Federal Reserve'. It belongs to the private banks, private
corporations. So we have farmed out to the Federal Reserve Banking
System that is owned exclusively, wholly, 100 percent by the private
banks — we have farmed out to them the privilege of issuing the
Government's money. If we were to take this privilege back from them, we
could save the amount of money that I have indicated in enormous
interest charges.” (End of Patman's 1941 speech.)
Under Patman, a little booklet summarizing
his views, in the form of questions and answers, called “A Primer On
Money”, was prepared by the Sub-committee on Domestic Finance, House
of Representatives, Committee on Banking and Currency — 88th Congress,
2nd session, August 4th, 1964. Here are excerpts:
Who has the right to create money in the United States?
A.: Under the Constitution, it is the right
and duty of Congress to create money. It is left entirely to Congress.
To whom has the Congress delegated this money-creating right?
A.: To the banking system, that is, to the
Federal Reserve System and to the commercial banks of the country.
If the Government can issue bonds, why can't it issue money, and save
A.: A few clear-headed and firm
individuals, such as Abraham Lincoln, have insisted that the Government
The late Thomas A. Edison stated the matter
this way: If our Nation can issue a dollar bond, it can issue a dollar
bill. The element that makes the bond good makes the bill good also. It
is absurd to say that our country can issue $30 million in bonds, and
not $30 million in currency. Both are promises to pay: but one promise
fattens the usurer, and the other helps the people.
However, it has long been one of the
political facts of life that private banks must be allowed to create the
lion's share of the money, even if not all of the money. Thus there is
little opposition to the Government's printing bonds, and then
permitting the banks to create the money with which to buy those bonds;
but proposals that the Government itself create the money instead of the
bonds have always set off tremendous political upheavals. For example,
Abraham Lincoln set off a political furor when he insisted upon having
the Government issue $346 million in money (the so-called
“greenbacks”) instead of issuing interest-bearing bonds, and paying
interest on the money.
If the Government issued more money instead of Government bonds, isn't
there a danger that the Government would issue too much money, and cause
A.: No. It is no more or no less
inflationary for the private banks to create $1 billion of new money
than it is for the Government to create $1 billion of new money.
Furthermore, as an agency of the Government, the Federal Reserve System
decides in any case the total amount of money to be created.
Louis Thomas McFadden (1876-1836) was
chairman of the House Committee on Banking and Currency from 1920
to 1931. He said, on June 10, 1932:
have in this country one of the most corrupt institutions the world has
ever known. I refer to the Federal Reserve Board and the Federal Reserve
Banks, hereinafter called the Fed. The Fed has cheated the Government of
these United States and the people of the United States out of enough
money to pay the nation's debt. The depredations and iniquities of the
Fed has cost enough money to pay the national debt several times over.
Jack Metcalf, Washington State Senator for
20 years, and U.S. Congressman from 1995 to 2000, a republican senator
in Washington, waged a war to abolish the Federal Reserve and restore to
Congress its power to issue money, a power that is clearly stated in the
most basic document, the U.S. Constitution, states in Article 1, Section
8: `The Congress shall have the power to coin money and regulate the
value thereof.' Nowhere is there the slightest hint of authorization to
delegate that power even to another governmental institution — much
less to a private banking system. That is absolutely outside the most
broad interpretation possible.”
In 1986, Metcalf single-handedly persuaded
the National Conference of State Legislators to endorse unanimously a
resolution urging states to challenge the constitutionality of the
Federal Reserve. He wrote a book, “The 200-year debate”, and
undertook a campaign to educate the population on the workings of the
banking system. One of his favorite ways to explain the workings of the
Fed is to tell the story of the “Federal Reserve saloon”:
cowboys put up their belongings as collateral to borrow a deck of cards.
The hitch is that each of the four must bring back 14 cards at the
the evening — a mathematical impossibility (there are only 52 cards in
all, that is to say, 13 to each). In the end, one player ends up with
only 10 cards and loses his belongings... that is the problem with
Fed. It creates money to make loans
but doesn't create the money to pay