Why it’s time to end the FED before the dollar goes bust

Tim White

I have been wrestling with an ominous smoking habit since about the 11th grade.  I’ve tried every gimmick from gum to patches to rubbing my belly and patting my head while listening to an original recording of “Rock Lobster” by the B-52’s.
 
I’ve discovered that, unfortunately, lighting up has become my pavlovian response to heartache and despair.  Lately, I’ve been smoking quite a bit.
 
“Your generation is so [expletive deleted]-ed,” said Howard Gensler, former dean of the Northrop University School of Law and Saddleback economics instructor, “You have no idea.”
 
What Gensler refers to is our staggering national debt that lies just north of $11.8 trillion.  In layperson’s terms, that’s enough money to outfit every person in the United States with a new 3 Series BMW and still have enough left over to order them all with leather and automatic transmissions. If that doesn’t break your swagger then keep in mind that the aforementioned figure continues to charge up at a rate just shy of $4 billion per day.
 
While sitting around the campfire, singing “Kumbaya”, and telling stories about all the mean and nasty Wall Street dwellers getting carted off to the hoosegow, we can’t lose sight of the fact that no amount of indictments can make $11.8 trillion of red ink go away. Left unchecked, our economy will experience a period of hyperinflation so violent and savage that the dollar itself will fail.
 
Let me reiterate: If we do not wake up, right now, our money will become worthless.
 
Before we can figure out how to save out precious greenbacks, we need to understand what, exactly, has happened to them.  Ideally, a dollar bill is a note that entitles its bearer to $1 worth of gold or silver that’s locked in a vault someplace.  The value of a dollar should be determined by comparing the amount of currency in circulation versus the nation’s gold supply.
 
This was the case until 1971 when President Nixon removed the gold standard to help manage our Vietnam War debts.  Without a gold standard, the value of our currency is purely speculative, meaning that it is only worth what is it perceived to be.  The danger of this arbitrary currency system, commonly referred to as fiat money, is that there is no tangible asset to back whatever debt is in question.
 
The other issue that the dollar faces is where the money physically comes from.  Per Section 8 of Article I of the Constitution, Congress should hold the duty of printing currency and regulating its value. This lasted until 1910, when concerns over financial panic prompted a group of bankers to meet secretly and devise what has come to be known as the Federal Reserve System, commonly referred as the FED. 
 
In 1913, Congress passed an act that established the FED, which continues today.  It holds the duties of printing currency, setting interest rates and regulating the money supply. 
 
Though regulated heavily by Congress, its board of directors consists of private citizens that represent the banks that collectively own the FED.  This system manifests behavior that favors the banks themselves, rather than the taxpayers that fund these operations.
 
When congress needs money that it is unable to raise through taxes, it simply takes a loan from the FED and injects it into the economy.  This money is comprised of fiat dollars, which never existed prior to Congress borrowing it.  Furthermore, this loan comes with interest that gets paid back to the FED.
 
Once these fiat dollars make it into the market, in ways such as stimulus checks and corporate bailouts, they eventually get deposited into a private bank. When the private bank goes to write a loan, rather than using its cash on hand, it uses the cash as collateral to borrow additional fiat funds, with interest, from the FED.
 
Two things occur when money is made out of nothing.  First, the buying power of each dollar is reduced, also known as inflation. A bag of groceries will cost more next year than it did this year, not because the groceries are worth more, but because the dollars spent are worth less. 
 
Secondly, all the interest payments made on the inflated fiat dollars filter their way back up to the FED.  Congress pays interest to the FED directly, as do the banks that borrowed money against the original fiat dollars that were deposited.  The private consumers may pay interest to the private banks, but remember that representatives from the private banks are the individuals that run the FED.
 
G. Edward Griffin, author of The Creature from Jekyll Island, suggests that if this cycle continues, the dollar will fall and we will be forced to adopt a global currency.  The danger in this, according to Griffin, is that if this global currency follows the system of the FED, the majority of the world’s wealth and power will be concentrated amongst the elite few that control the currency.
 
As the national debt soars and the public-at-large is bankrupted by inflation, FED is stuffing its pockets with interest payments made on money that never really existed to begin with. In order to combat this vicious landslide, we need to re-establish the gold standard to solidify whatever value is left in the dollar.  We need to move the control of our monetary policy back to Congress, where policy can be set to benefit the taxpayer and not the corporate banks that run the FED.
 
This is your money that we’re talking about.  This is your future.  End the FED.
 

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