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Traci Page August 6, 2009 Critical Thinking The Federal Reserve is a privately owned business that was incorporated

in 1914 and was created to provide stabilization and growth to our economy by providing a safer and more flexible banking system. This is accomplished by following the basic principles of business which is to employ workers and provide needed goods and services to the public.

One of the services provided is the ensuring of the stability in the purchasing power of the dollar and by regulating the flow of money used in commerce. This was accomplished by the establishment of 12 Federal Reserve Banks that act as central banks under which all commercial banks operate.

When a deposit is made into a commercial bank, the bank is only required to keep a portion of the amount deposited and loans out the rest. Interest is paid on these deposits and charged on the money loaned creating revenue. This practice is called fractional reserve banking and is highly controversial. The controversy stems from the fact that the Central banks, owned and operated by the Fed, are creating money out of nothing when they loan money. If a bank experiences a run, when depositors demand their money, the banks have to borrow money from the Fed to cover their obligations. This can create a flooding of the market with Federal Reserve notes and cause inflation to occur due to the over saturation. The Fed can also withhold these notes and can cause huge crisis in

the financial stability of the nation as evidenced by the Great Depression and the crisis of 1929.

The whole concept of central banks was rejected in its entirety when this nation was conceived. Andrew Jackson was vehemently opposed to their creation due to the influence of international entities in our financial affairs. The Revolutionary War was fought to end the ternary of the English in our financial affairs. The 12 central banks are owned by larger banks and are tied to the German Rothschild family.

After the Fed was operational, congress drafted a bill that was to become our 16th Amendment to the Constitution. This bill granted Congress the right to levy an income tax on all income basically as they saw fit in order to repay the interest charged when loans are made by the Federal Reserve. Each state voted on this bill and the bill was not approved as written by many. Changes were made and then voted on and approved. Some states never approved or disapproved of the bill, and some voted against the bill in its entirety. Despite not having the required number of states in favor of the bill, it was declared in effect and its validity upheld as constitutional. The IRS was created as the collection agency for these illegal taxes.

It is obvious that placing so much power with one entity that claims to be a private corporation but whose Board of Governors is appointed by the president, should never have the power it wields over the nations economy. The practice of

fractional reserve banking has bankrupted our country and will be the cause of our insolvency. Thomas Jefferson summed it up quite well when he said, I place economy among the first and most important virtues, and public debt as the greatest of dangers. To preserve our independence, we must not let our rulers load us with perpetual debt.

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