Ron Paul in the American Conservative Magazine
by Ron Paul
American Conservative Magazine
Fri, Sep 18th, 2009 12:00:00 am
Most Americans haven’t thought much about the strange entity that controls the nation’s money. Visitors to Washington can see the Federal Reserve’s palatial headquarters, the monetary parallel to the Supreme Court or the U.S. Capitol. We hear the Fed chairman testify to Congress, citing complex data, making predictions, and attempting to intimidate anyone who would take issue. He postures as master of the universe, completely knowledgeable and in control.
But how much do we really know about what goes on inside the Fed? Even with the newest round of bailouts, journalists had difficulty determining where the money was coming from and where it was headed. From its founding in 1913, secrecy and inside deals have been part of the way the Fed works.
It says that its job is to keep inflation in check. But this is like the car industry claiming to control road congestion. The Fed might attempt to stop the effects of inflation, namely rising prices. But under the old definition of inflation—an artificial increase in the supply of money and credit—the reason for its existence is to generate more, not less.
The banking industry has always had trouble with the idea of a free market that provides opportunities for both profits and losses. The first part, the industry likes. The second is another matter. That is the reason for the constant drive in American history toward the centralization of money, a trend that not only benefits the largest banks with the most to lose from a sound-money system, but also the government, which is able to use an elastic system as an alternative form of revenue support.
Whenever instability turns up, we see efforts to socialize the losses, but rarely do people question the source of instability. Economist Jesús Huerta de Soto places the blame on the institution of fractional-reserve banking. This is the notion that depositors’ money in use as cash may also be loaned out for speculative projects, then re-deposited. The system works as long as people do not attempt to withdraw their money all at once. In the face of such a demand, banks turn to other banks to provide liquidity. But when the failure becomes system-wide, they turn to government.
The core of the problem is the conglomeration of two distinct functions of a bank. The first is warehousing, whereby banks keep money safe and provide checking, ATM access, record keeping, and online payment, services for which consumers are traditionally asked to pay. The second service the bank provides is a loan service, seeking out investments and putting money at risk in search of return.
The institution of fractional reserves mixes these functions, such that warehousing becomes a source for lending. The bank loans out money that has been warehoused—and stands ready to use in checking accounts or other forms of checkable deposits—and that loaned money is deposited yet again in checkable deposits. It is loaned out again and deposited, with each depositor treating the loan money as an asset on the books. In this way, fractional reserves create new money, pyramiding it on a fraction of old deposits. An initial deposit of $1,000, thanks to this “money multiplier,” turns into $10,000. The Fed adds reserves to the balances of member banks in the hope of inspiring ever more lending.
Are you looking for Solutions for America in Distress
You are in the right place to find out about what is really going on behind the scenes in the patriot movement in America, including solutions from Oathkeepers, Anna Von Reitz, Constitutional Sheriffs, Richard Mack, and many more people who are leading the charge to restore America to freedom and peace. Please search on the right for over 8400 articles.
You will find some conflicting views from some of these authors. You will also find that all the authors are deeply concerned about the future of America. What they write is their own opinion, just as what I write is my own. If you have an opinion on a particular article, please comment by clicking the title of the article and scrolling to the box at the bottom on that page. Please keep the discussion about the issues, and keep it civil. The administrator reserves the right to remove any comment for any reason by anyone. Use the golden rule; "Do unto others as you would have them do unto you." Additionally we do not allow comments with advertising links in them for your products. When you post a comment, it is in the public domain. You have no copyright that can be enforced against any other individual who comments here! Do not attempt to copyright your comments. If that is not to your liking please do not comment. Any attempt to copyright a comment will be deleted. Copyright is a legal term that means the creator of original content. This does not include ideas. You are not an author of articles on this blog. Your comments are deemed donated to the public domain. They will be considered "fair use" on this blog. People donate to this blog because of what Anna writes and what Paul writes, not what the people commenting write. We are not using your comments. You are putting them in the public domain when you comment. What you write in the comments is your opinion only. This comment section is not a court of law. Do not attempt to publish any kind of "affidavit" in the comments. Any such attempt will also be summarily deleted. Comments containing foul language will be deleted no matter what is said in the comment.
Sunday, September 20, 2009
The Money Monopoly: How the Federal Reserve rips you off !
Subscribe to: Post Comments (Atom)
adidas tubular shadow
off white clothing
nike air max 2017