“Federal Reserve”: NO On Both Claims

abolish-the-fed300x46Congressman Ron Paul’s central theme for the past decade has been this: “Abolish the Federal Reserve.” He’s described it as the root of all economic evil in this country. The Fed’s “Pump-and-Dump” manipulation of the money supply has given us our booms & busts, our recessions & (now) depressions.

G. Edward Griffin, author of “The Creature from Jeckyl Island,” has written extensively on the Fed. He and Representative Paul are in agreement.

monopoly-money150x79I have echoed their claims that the Federal Reserve is neither “federal” nor a “reserve.” Recently, my high-school son decided to create a PowerPoint presentation on the sins of the Fed for a class assignment. He repeated the claim about the Fed being neither “federal” nor a “reserve.” But he needed to cite proof.

The Fed’s quite slippery but here are some intersting “proofs” that have been uncovered.

The Fed’s Not Federal
We look to our Circuit Courts and their rulings to find:
1) Lewis v. United States, 680 F.2d 1239 (1982). [link]
“The Court of Appeals, Poole, Circuit Judge, held that federal reserve banks are not federal instrumentalities for purposes of the Act, but are independent, privately owned and locally controlled corporations.”
2) Kennedy C. Scott v. Federal Reserve Bank of Kansas City [link]
“The Bank states that Federal Reserve Bank employees are not considered federal employees, officials, or representatives for purposes of 12 U.S.C. § 341. The Bank also contends, inter alia, that the plain language of 28 U.S.C. § 451 and relevant case law state that Federal Reserve Banks are not federal agencies.”
“We now hold that the Federal Reserve Bank of Kansas City is not an agency of the federal government for purposes of Fed. R. App. P. 4(a)(1)(B), and accordingly dismiss the appeal as untimely.”

The Fed Has No Reserves
This one’s really tough. Sure, you can go into a lengthy discussion on fractional reserve lending (banks are allowed to lend 97% of deposits). How about the absurdities of Federal Reserve Banks booking their customers’ deposits as liabilities (because the bank must return the customers’ deposits when asked) and the banks’ loans as assets (even though they don’t own the cash being loaned; it’s actually their customers deposits).

But these circumstanses, while true, are not succinct enough for a “statist” public school system to grasp. But look at this: I found the smoking gun on the Fed’s own web site.
http://www.federalreserve.gov/releases/h3/current/h3.htm

Scroll down to the first report shown: “AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND THE MONETARY BASE “.

aggregate-reserves-of-dep-institutions_sm

See those negative numbers? The 3,400 banks that belong to the Federal Reserve system are, in total, without ANY cash reserves from Jan 2009 through Nov 2008. ALL the reserves they are required to maintain by US code (only 3%) are BORROWED.

The Federal Reserve Banks had NO cash reserves.

And We The People are left with an unstable currency constantly losing value.

cons-price-inx-since-1800

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2 Responses

  1. goldmansachs exposed.blogspot.com

  2. […] Ponder this reader’s letter from G. Edward Griffin’s web site. (He’s one of my heroes and author of an expose on the Federal Reserve.) […]

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