The Fed and its 100+ Year Heist
NOTE: I originally wrote this short essay for my college newspaper with the intention of educating young people on the woes that Central Banking has brought to the country and the world. My hope is that now that so many college students are grappling with debt that they can finally start caring about economic issues and how they've been getting screwed by the Fed before they were even born. If you know a college student frustrated about their economic state of the country please share this with them so that they can understand that government isn't the solution to their problems, but in fact is the problem.
With the many recent protests and walkouts against gun violence, both on and off college campuses, I began thinking about something else that ought to be protested again. Something so harmful to the people of the United States that President Thomas Jefferson wrote it was “more dangerous to our liberties than standing armies.” A threat so powerful and dangerous that the organization behind it has infinitely more political influence and money than the National Rifle Association or Kim Jong Un can ever dream of. This threat is the United State’s own Central Bank: the Federal Reserve (Fed).
The Fed was established over one hundred years ago on December 23, 1913, by Congress with the help of a commission of executives representing J.P. Morgan and the Rockefellers with the goal of “stabilizing” the US economy.
To best describe the Fed’s function, I will quote the Fifth Plank of Karl Marx’s Communist Manifesto: “Centralization of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly.” The Fed was created to control the nation’s monetary policy, transforming the economy from the form that brought about its greatest period of economic growth during the Gilded Age (1870s through 1900s) to the boom and bust cycle that Americans born in the past century have come to know and hate.
It’s an incredibly complicated system that can’t be thoroughly explained in just one article but, basically, every time the US government needs more money (which according to a 2014 CBS News article is $6.85 million dollars every minute), it borrows that amount from the Fed with the caveat being the amount will have to be paid back at some point with interest. Since the government’s main source of revenue is taxation, the American people are the ones who will inevitably foot the bill, which as of 2018 is in the trillions of dollars.
“The Fed’s great! It manages inflation so that there’s enough money going around so people can buy things!” supporters of the Fed might tell you. Wrong. In a process economist Murray Rothbard described as legalized counterfeiting, the Fed’s policy of inflation has been devaluing America’s money since the Fed’s inception. Have you ever heard an elderly person comment on how most things didn’t cost as much back in their day? You have the Fed to thank for that. New Hampshire’s minimum wage is $7.25 per hour. According to the inflation calculator on the Bureau of Labor Statistics website, in 1968, that $7.25 would be worth $53.06 in today’s money. By constantly adding more dollars with no value behind them to the money supply, the Fed decreases the value of the money in savings accounts, cash registers and wallets.
If none of that’s got your blood boiling, wait until you find out how the Fed chooses the economy’s winners and losers. The Fed primarily does this by quantitative easing (injecting money into the economy to simulate growth), but it also has given trillions of dollars in secret loans to “too big to fail” banks (many of which had already received bailouts from the government) and has a policy that pays banks to not lend their money to customers. How does that affect you? Less loans being lent out means less competition among lenders to keep their interest rates low, i.e. college students in need of funds are stuck with high interest rates.
The Wolf of Wall Street could only dream of running a scam this lucrative. Every effort to challenge the Fed, most notably former Representative Ron Paul’s ‘Audit the Fed’ bill, has ended due to the fearmongering and machinations spread by the Fed’s many acolytes and dependents in the media, financial industry and on Capitol Hill.
In 2016, former Dallas Federal Reserve Bank President Richard Fisher admitted the Fed’s policies “skewered” the middle class. Hopefully, with this admission straight from the horse’s mouth, along with the increasing awareness America’s youth has of the dangers of debt, the disastrous manipulation of the economy by the Federal Reserve can end, and a freer, fairer economy can help our generation prosper and not live in the bondage of debt slavery.