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What Is The Federal Reserve
by Greg Hobbs
The FED is a central bank. Central banks are supposed to
implement a country's fiscal policies. They monitor commercial banks to ensure
that they maintain sufficient assets, like cash, so as to remain solvent and
stable. Central banks also do business, such as currency exchanges and gold
transactions, with other central banks. In theory, a central bank should be good
for a country, and they might be if it wasn't for the fact that they are not
owned or controlled by the government of the country they are serving. Private
central banks, including our FED, operate not in the interest of the public good
but for profit.
There have been three central banks in our nation's
history. The first two, while deceptive and fraudulent, pale in comparison to
the scope and size of the fraud being perpetrated by our current FED. What they
all have in common is an insidious practice known as "fractional banking."
Fractional banking or fractional lending is the ability to create money
from nothing, lend it to the government or someone else and charge interest to
boot. The practice evolved before banks existed. Goldsmiths rented out space in
their vaults to individuals and merchants for storage of their gold or silver.
The goldsmiths gave these "depositors" a certificate that showed the amount of
gold stored. These certificates were then used to conduct business.
time the goldsmiths noticed that the gold in their vaults was rarely withdrawn.
Small amounts would move in and out but the large majority never moved. Sensing
a profit opportunity, the goldsmiths issued double receipts for the gold, in
effect creating money (certificates) from nothing and then lending those
certificates (creating debt) to depositors and charging them interest as well.
Since the certificates represented more gold than actually existed, the
certificates were "fractionally" backed by gold. Eventually some of these vault
operations were transformed into banks and the practice of fractional banking
Keep that fractional banking concept in mind as we examine
our first central bank, the First Bank of the United States (BUS). It was
created, after bitter dissent in the Congress, in 1791 and chartered for 20
years. A scam not unlike the current FED, the BUS used its control of the
currency to defraud the public and establish a legal form of usury.
bank practiced fractional lending at a 10:1 rate, ten dollars of loans for each
dollar they had on deposit. This misuse and abuse of their public charter
continued for the entire 20 years of their existence. Public outrage over these
abuses was such that the charter was not renewed and the bank ceased to exist in
The war of 1812 left the country in economic chaos, seen by
bankers as another opportunity for easy profits. They influenced Congress to
charter the second central bank, the Second Bank of the United States (SBUS), in
The SBUS was more expansive than the BUS. The SBUS sold franchises
and literally doubled the number of banks in a short period of time. The country
began to boom and move westward, which required money. Using fractional lending
at the 10:1 rate, the central bank and their franchisees created the debt/money
for the expansion.
Things boomed for a while, then the banks decided to
shut off the debt/money, citing the need to control inflation. This action on
the part of the SBUS caused bankruptcies and foreclosures. The banks then took
control of the assets that were used as security against the loans.
Closely examine how the SBUS engineered this cycle of prosperity and
depression. The central bank caused inflation by creating debt/money for loans
and credit and making these funds readily available. The economy boomed. Then
they used the inflation which they created as an excuse to shut off the
The resulting shortage of cash caused the economy to
falter or slow dramatically and large numbers of business and personal
bankruptcies resulted. The central bank then seized the assets used as security
for the loans. The wealth created by the borrowers during the boom was then
transferred to the central bank during the bust. And you always wondered how the
big guys ended up with all the marbles.
Now, who do you think is
responsible for all of the ups and downs in our economy over the last 85 years?
Think about the depression of the late '20s and all through the '30s. The FED
could have pumped lots of debt/money into the market to stimulate the economy
and get the country back on track, but did they? No; in fact, they restricted
the money supply quite severely. We all know the results that occurred from that
action, don't we?
Why would the FED do this? During that period asset
values and stocks were at rock bottom prices. Who do you think was buying
everything at 10 cents on the dollar? I believe that it is referred to as
consolidating the wealth. How many times have they already done this in the last
Do you think they will do it again?
Just as an aside
at this point, look at today's economy. Markets are declining. Why? Because the
FED has been very liberal with its debt/credit/money. The market was hyper
inflated. Who creates inflation? The FED. How does the FED deal with inflation?
They restrict the debt/credit/money. What happens when they do that? The market
Several months back, after certain central banks said they
would be selling large quantities of gold, the price of gold fell to a 25-year
low of about $260 per ounce. The central banks then bought gold. After buying at
the bottom, a group of 15 central banks announced that they would be restricting
the amount of gold released into the market for the next five years. The price
of gold went up $75.00 per ounce in just a few days. How many hundreds of
billions of dollars did the central banks make with those two press releases?
Gold is generally considered to be a hedge against more severe economic
conditions. Do you think that the private banking families that own the FED are
buying or selling equities at this time? (Remember: buy low, sell high.) How
much money do you think these FED owners have made since they restricted the
money supply at the top of this last current cycle?
Alan Greenspan has
said publicly on several occasions that he thinks the market is overvalued, or
words to that effect. Just a hint that he will raise interest rates (restrict
the money supply), and equity markets have a negative reaction. Governments and
politicians do not rule central banks, central banks rule governments and
politicians. President Andrew Jackson won the presidency in 1828 with the
promise to end the national debt and eliminate the SBUS. During his second term
President Jackson withdrew all government funds from the bank and on January 8,
1835, paid off the national debt. He is the only president in history to have
this distinction. The charter of the SBUS expired in 1836.
central bank to manipulate the supply of money, the United States experienced
unprecedented growth for 60 or 70 years, and the resulting wealth was too much
for bankers to endure. They had to get back into the game. So, in 1910 Senator
Nelson Aldrich, then Chairman of the National Monetary Commission, in collusion
with representatives of the European central banks, devised a plan to pressure
and deceive Congress into enacting legislation that would covertly establish a
private central bank.
This bank would assume control over the American
economy by controlling the issuance of its money. After a huge public relations
campaign, engineered by the foreign central banks, the Federal Reserve Act of
1913 was slipped through Congress during the Christmas recess, with many members
of the Congress absent. President Woodrow Wilson, pressured by his political and
financial backers, signed it on December 23, 1913.
Recommend you all read
“The Creature from Jekyll Island” by Edward Griffin, so you understand the FED
and how it was created and by whom.
The act created the Federal Reserve
System, a name carefully selected and designed to deceive. "Federal" would lead
one to believe that this is a government organization. "Reserve" would lead one
to believe that the currency is being backed by gold and silver. "System" was
used in lieu of the word "bank" so that one would not conclude that a new
central bank had been created.
In reality, the act created a private,
for profit, central Banking Corporation owned by a cartel of private banks. Who
owns the FED? The Rothschilds of London and Berlin; Lazard Brothers of Paris;
Israel Moses Seif of Italy; Kuhn, Loeb and Warburg of Germany; and the Lehman
Brothers, Goldman, Sachs and the Rockefeller families of New York.
you know that the FED is the only for-profit corporation in America that is
exempt from both federal and state taxes? The FED takes in about one trillion
dollars per year tax free! The banking families listed above get all that money.
Almost everyone thinks that the money they pay in taxes goes to the US
Treasury to pay for the expenses of the government. Do you want to know where
your tax dollars really go? If you look at the back of any check made payable to
the IRS you will see that it has been endorsed as "Pay Any F.R.B. Branch or Gen.
Depository for Credit U.S. Treas. This is in Payment of U.S. Oblig." Yes, that's
right, every dime you pay in income taxes is given to those private banking
families, commonly known as the FED, tax free.
Like many of you, I had
some difficulty with the concept of creating money from nothing. You may have
heard the term "monetizing the debt," which is kind of the same thing. As an
example, if the US Government wants to borrow $1 million ó the government does
borrow every dollar it spends ó they go to the FED to borrow the money. The FED
calls the Treasury and says print 10,000 Federal Reserve Notes (FRN) in units of
one hundred dollars.
The Treasury charges the FED 2.3 cents for each
note, for a total of $230 for the 10,000 FRNs. The FED then lends the $1 million
to the government at face value plus interest. To add insult to injury, the
government has to create a bond for $1 million as security for the loan. And the
rich get richer. The above was just an example, because in reality the FED does
not even print the money; it's just a computer entry in their accounting system.
To put this on a more personal level, let's use another example.
banks are members of the Federal Reserve Banking System. This membership makes
it legal for them to create money from nothing and lend it to you. Today's
banks, like the goldsmiths of old, realize that only a small fraction of the
money deposited in their banks is ever actually withdrawn in the form of cash.
Only about 3 or 4 percent of all the money that exists is in the form of
currency. The rest of it is simply a computer entry.
Let's say you're
approved to borrow $10,000 to do some home improvements. You know that the bank
didn't actually take $10,000 from its pile of cash and put it into your pile?
They simply went to their computer and input an entry of $10,000 into your
account. They created, from thin air, a debt, which you have to secure with an
asset and repay with interest. The bank is allowed to create and lend as much
debt as they want as long as they do not exceed the 10:1 ratio imposed by the
It sort of puts a new slant on how you view your friendly bank,
doesn't it? How about those loan committees that scrutinize you with a
microscope before approving the loan they created from thin air. What a hoot!
They make it complex for a reason. They don't want you to understand what they
are doing. People fear what they do not understand. You are easier to delude and
control when you are ignorant and afraid.
Now to put the frosting on
this cake. When was the income tax created? If you guessed 1913, the same year
that the FED was created, you get a gold star. Coincidence? What are the odds?
If you are going to use the FED to create debt, who is going to repay that debt?
The income tax was created to complete the illusion that real money had been
lent and therefore real money had to be repaid. And you thought Houdini was
So, what can be done? My father taught me that you should always
stand up for what is right, even if you have to stand up alone.
the People" don't take some action now, there may come a time when "We the
People" are no more. You should write a letter or send an email to each of your
elected representatives. Many of our elected representatives do not understand
the FED. Once informed they will not be able to plead ignorance and remain
silent. This petition will be sent to all members of Congress, do your part and
sign this petition.
Article 1, Section 8 of the US Constitution
specifically says that Congress is the only body that can "coin money and
regulate the value thereof." The US Constitution has never been amended to allow
anyone other than Congress to coin and regulate currency.
representative, in light of that information, how it is possible for the Federal
Reserve Act of 1913, and the Federal Reserve Bank that it created, to be
constitutional. Ask them why this private banking cartel is allowed to reap
trillions of dollars in profits without paying taxes. Insist on an answer.
Thomas Jefferson said, "If the America people ever allow private banks
to control the issuance of their currencies, first by inflation and then by
deflation, the banks and corporations that will grow up around them will deprive
the people of all their prosperity until their children will wake up homeless on
the continent their fathers conquered."
Jefferson saw it coming 150
years ago. The question is, "Can you now see what is in store for us if we allow
the FED to continue controlling our country?"
"The condition upon which God
hath given liberty to man is eternal vigilance; which condition if he breaks,
servitude is at once the consequence of his crime, and the punishment of his
guilt." (John P. Curran)
Reprinted with the author's permission.
Posted April 23,
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