Let’s Terminate the Federal Reserve

Let’s Terminate the Federal Reserve
by JBS President Emeritus John F. McManus

The Federal Reserve came to life in 1913 through an act of Congress. At the time of its creation, U.S. paper currency (issued by the Treasury Department) stated that all paper money could be redeemed in precious metal. Over the course of several decades, issuance of currency shifted from the Treasury Department to the Federal Reserve and the promise to redeem paper currency for gold or silver disappeared.

Right now, bills have been introduced in Congress calling for the Fed to be audited (Image from Flickr by Pictures of Money, CC by 2.0).

The U.S. dollar, known widely to be “good as gold” when the Fed was born, was worth 100 cents. Today, it’s worth is less than two cents. Where that value went is something the American people have a right to know. But, today, the Fed’s history and its monetary manipulations aren’t well enough known to get answers to many questions about how it operates.

Mostly through the efforts of two men needed attention is being drawn to the Fed’s stranglehold over our nation’s monetary system. The two are G. Edward Griffin, who authored the blockbuster book The Creature From Jekyll Island and Ron Paul, the retired congressman from Texas. The Griffin book traces the history of the Fed from its conception at a secret meeting held at Jekyll Island, Georgia, to its gradual yet, largely hidden acquisition of power over our nation’s economic life.

While serving in Congress, Ron Paul sought for years to have Congress audit the organization. In its more than a century of operation, no such audit has ever been conducted. Though retired, Paul’s efforts to have fellow House members require such a sensible examination continue. And they seem poised to achieve some success.

But still there will be resistance to these credited efforts. Fed Chairman Janet Yellen doesn’t want the Fed audited. She claims a need to have it operate independently with no outside scrutiny. Former Treasury Secretary (1995-1999) and current co-chairman of the elitist Council on Foreign Relations, Robert Rubin also wants the Fed to remain independent. He maintains that politicization of the Fed would be harmful and the choices of those who lead it should not be changed.

A short column such as this one can only touch on the harm done by the Fed. But let us at least point to an article appearing in the January 1993 issue of National Geographic magazine. NG Assistant Editor Peter White visited the Fed and was told by one of its unnamed officials that whenever the Fed buys U.S. Treasury bills (IOUs), it does so with money that “didn’t exist before.” “We created it,” says the Fed official, while admitting freely that there is no limit on such a practice except “the good judgment” of Fed officials.

Fed transactions of this kind are carried out repeatedly. Each new creation of money acquires its value by watering down (stealing!) the worth of all existing money. That happens to be what inflation truly is. Whenever a counterfeiter “creates” money, he is chased and, when caught, suffers punishment for doing what the Fed repeatedly does. If you wonder why prices are rising for homes, autos, groceries, etc., an answer has just been supplied. The price you pay simply reflects the worth of the increasingly valueless money you use.

Right now, bills have been introduced in Congress calling for the Fed to be audited. In the House, H.R. 24 seeks such a goal. In the Senate, S. 16 does likewise. Even though it’s only a first step toward freeing America of the ravages of the Fed, it’s certainly time for such scrutiny.

If you are one of the many Americans who are suffering from the shrinking monetary value of your salary, savings, possessions, etc., contact your congressman and two senators and ask each to support the appropriate Federal Reserve Transparency Act. That’s the formal name for H.R. 24 in the House and S. 16 in the Senate.

Are you receiving our free weekly e-newsletter? Sign up today! Be sure to also get our free Top Daily Headlines from The New American.

McManus_2Mr. McManus served in the U.S. Marine Corps in the late 1950s and joined the staff of The John Birch Society in August 1966. He has served various roles for the organization including Field Coordinator, Director of Public Affairs, and President. Mr. McManus has appeared on hundreds of radio and television programs and is also author of a number of educational DVDs and books. Now President Emeritus, he continues his involvement with the Society through public speaking and writing for this blog, the JBS Bulletin, and The New American.

It’s Way Past Time to Audit the Fed

It’s Way Past Time to Audit the Fed
by JBS President John F. McManus

Born in 1913, the Federal Reserve is now more than 100 years old. In its century of existence, it has presided over the loss of the dollar’s purchasing power from 100 cents to two cents. It has also bailed out banks and industries here in America and in foreign lands. But it has never been subjected to a real audit. So, members of both Houses of Congress have introduced legislation to have the Fed open its books and submit to a thorough scrutiny conducted by the Comptroller General of the United States.

And, of course, no Fed official wants the public to know that “The Communist Manifesto” called for what the Fed truly is – a key step among the ten listed by Marx to take control of any nation (Image from ShopJBS.org).

Fed officials contend that such an examination will impair its independence, as if the management of the nation’s economic life and its currency should be free of inspection by the people’s representatives. And, of course, no Fed official wants the public to know that “The Communist Manifesto” called for what the Fed truly is – a key step among the ten listed by Marx to take control of any nation. Marx wrote in 1848 of the need for: “Centralization of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.” That’s what the Fed is, with the exception that it is not in the hands of the State, it is privately owned, a step beyond what Marx called for.

In 2012 and 2014, members of the U.S. House voted overwhelmingly (more than 300 each time) to have an audit conducted. But the Senate, in the hands of then-Majority Leader Harry Reid (D-Nev.), whose office gave him power to refuse consideration of what he did not want, never voted on a similar measure because Reid blocked it. Past attempts to have an audit conducted died courtesy of Reid. But the new Senate Majority Leader is Mitch McConnell (R-Ky.) and he is one of 30 senators who have already co-sponsored S. 264, a measure calling for the audit.

The House is again expected to pass the call for an audit as proposed in H. R. 24. Senators should be contacted to persuade them to add their names to the list of co-sponsors for S. 264, the companion measure in the Senate. If both Houses agree that an audit should be conducted, the measure will go to the president who is expected to veto it. Then it goes back to both Houses of Congress where two-thirds approval in each House can override the presidential veto.

As evidenced by Fed Chairman Janet Yellen’s recent action, Fed officials are fearful of any audit. She took the unusual step of travelling to the Senate to urge friendly senators to block passage of S. 264. As usual, she insisted that the Fed should remain independent of scrutiny. Let us hope that enough senators see through that absurdity and cast their vote accordingly.

Americans can expect to see prominent economists speak out against the needed audit. Many PhDs in this field are already on the Fed’s payroll, either as full employees or consultants. The amount of money doled out to them should also become known in order to show that their favoring of the Fed’s vaunted “independence” has been bought.

An honest audit of the Fed could lead to its eventual demise and the return in America to real money backed by a commodity, not paper money backed by nothing. And that would signal the beginning for America of economic vitality and strengthened independence.

Interested readers should contact their state’s two senators and request passage of S. 264.

Mr. McManus joined the staff of The John Birch Society in August 1966 and has served various roles for the organization including Field Coordinator, Director of Public Affairs, and now President. He remains the Society’s chief media representative throughout the nation and has appeared on hundreds of radio and television programs. Mr. McManus is also Publisher of The New American magazine and author of a number of educational DVDs and books.

Deficits Invite Catastrophe

Deficits Invite Catastrophe
by JBS President John F. McManus

Former Michigan Congressman David Stockman (1977-1981) accepted appointment as Director of the Office of Management and Budget at the launching of the Reagan administration in 1981. He stayed in that post until 1985 and left forecasting larger deficits than had ever been compiled by any previous president. He now issues his thoughts about the nation’s finances in what is called “Stockman’s Corner.”

In a recent posting, Stockman recalled that the national debt went beyond the $1 trillion plateau on October 22, 1981. His pointing this out reminded me of the “No Trillion Dollar Debt” campaign waged by The John Birch Society during that year. It was surely not one of the organization’s most successful efforts.

Stockman noted that it took 205 years to compile a single trillion dollars of indebtedness. He calculated that all those years added up to 74,984 days. But the admitted national debt, now at $18 trillion, saw its latest addition of a $1 trillion dollars added to the debt total in a single 365-day year.

We often hear that President Reagan created a minimal government and was as thrifty with the people’s money as any president had ever been. But the figures tell a different story. The Reagan-G.H.W. Bush years (1981-1993) produced three times the average annual deficit that had been amassed during the peacetime years led by Democrats Franklin Roosevelt, John Kennedy, Lyndon Johnson and Jimmy Carter combined. Stockman even quotes Dick Cheney, who served in the first Bush administration, saying “deficits don’t matter.” The problem is that they do matter – very much.

Stockman expects the unrestrained government will add “at least $15 trillion of new public debt in the decade ahead.” That amount of accumulated red ink added to the total will likely top the Gross Domestic Product (GDP) for the year 2024.

What does all of this mean for Americans? It means that the future will grow dimmer every year, and that the nation will become more seriously beholden to creditors such as communist-led China that has vowed to destroy the U.S.

There is no way out of this increasingly grim situation but a sharp cutback in federal spending. Instead, led by a President who cares little about deficits and by leaders of both political parties who are strongly disinclined to cease buying votes with the people’s money and the Federal Reserve’s continual creation of dollars backed by nothing, the outlook for fiscal sanity appears extremely poor.

Over the years, Stockman has stated that “the Republican Party has totally abdicated its job … as guardian of fiscal discipline” and that the GOP “was hijacked by modern imperialists during the Reagan era.” Correct! As for himself, he has stated that he “invests in anything that Bernanke can’t destroy, including gold, canned beans, bottled water and flashlight batteries.”

Of course, Ben Bernanke no longer sits atop the Federal Reserve. The privately owned and completely unconstitutional Fed is led by Janet Yellen. There is no reason to expect any change in America’s suicidal fiscal policies.

Mr. McManus joined the staff of The John Birch Society in August 1966 and has served various roles for the organization including Field Coordinator, Director of Public Affairs, and now President. He remains the Society’s chief media representative throughout the nation and has appeared on hundreds of radio and television programs. Mr. McManus is also Publisher of The New American magazine and author of a number of educational DVDs and books.

What to Do About Government Economic Fraud

What to Do About Government Economic Fraud
by JBS President John F. McManus

Paul Singer manages the hedge fund Elliott Management. He’s a billionaire and has helped those who invest with him to reap substantial gains. In a recent message he sent to the fund’s clients, he stated:

Nobody can predict how long government can get away with fake growth, fake money, fake jobs, fake financial stability, fake inflation numbers and fake income growth…. We do not think optimism is warranted, and we think a lot of the data is cooked or misleading.

Is Singer correct? The New York Times published a denial from Jesse Eisinger, a reporter for the independent new provider Pro Publica. Eisinger could hardly be more dismissive of the claims issued by Mr. Singer.

Who’s right and who’s wrong? We tend to side with Singer. We do so because of numerous phony claims issued by government. For instance, the unemployment rate claimed by officialdom doesn’t include people who have given up finding a job or others who were formerly employed full-time and are now able to find only part-time jobs. Counting part-time employment as real employment when the people involved want a steady job is deceitful. Real unemployment is likely twice the figure given by government.

In addition, government relies on a fraudulent definition of inflation – that it is rising prices. Even then, what’s in the “basket” of goods whose costs are totaled in the Consumer Price Index is regularly changed in order to reflect government’s reassuring claims. But inflation is an increase in the quantity of currency – the making of newly created dollars that have no backing and derive their value by lessening the value of everyone’s dollars. Ask a supermarket shopper whether it costs more dollars to shop each month and you’ll get a good lesson in what inflation truly is.

As for growth, U.S. manufacturing wealth creation is way down, and so is income growth. When the value of the dollar shrinks by an amount that even a raise in pay doesn’t cover, there’s no growth – except in the true rate of inflation.

In recent years, the Federal Reserve has waged war on the dollar with a program dubbed Quantitative Easing. That’s a clever name for a thieving process that creates dollars out of nothing and floods a favored few with them. But Q.E. is inflation pure and simple. It may have helped some “too big to fail” friends of the Fed to survive. But meanwhile, the American people continued to face higher prices, fewer jobs, and deceitful statistics.

So the conclusions reached by Paul Singer are worth consideration.

What to do about this? Start with an audit of the Fed, a demand recently made by 333 members of the U.S. House that awaits approval in the Senate. Unfortunately, the Senate will be led by Harry Reid until January when a new measure will have to be generated by the House and then sent to the Senate again. Maybe then, it will get the respect it deserves.

If the full truth about the Fed were known, public sentiment aimed at having it abolished would mushroom. Then, there would be moves to end deficit spending and cut back the size of government to what is authorized by the Constitution. Eliminating unconstitutional agencies and bureaus (education, energy, housing, medical care, foreign aid, and more) would be a boon to the nation. Also, Congress should put an end to creation of so-called “free trade” agreements that make it advantageous for businesses to flee the U.S. for cheap labor overseas. Finally, demand truth from government officials – all of them right up to and including the President.

The course our country is on amounts to suicide. Those who provide the fake data and the cooked books are steering America into a world government. Some honesty about that would help to bring about needed corrective actions and guarantee continued existence of our nation, free and independent.

Mr. McManus joined the staff of The John Birch Society in August 1966 and has served various roles for the organization including Field Coordinator, Director of Public Affairs, and now President. He remains the Society’s chief media representative throughout the nation and has appeared on hundreds of radio and television programs. Mr. McManus is also Publisher of The New American magazine and author of a number of educational DVDs and books.

Auditing the Federal Reserve

Auditing the Federal Reserve
by JBS President John F. McManus

On September 17, 2014, the House of Representatives voted 333 to 92 in favor a measure calling for an audit of the Federal Reserve. Introduced by Representative Paul Broun (R-Ga.), H.R. 24 won the support of 227 Republicans and 106 Democrats – which is well beyond the two-thirds needed for passage. Californian John Campbell was the lone Republican House member who sided with 91 Democrat opponents of the bill. The Senate must now give its two-thirds approval of the companion measure, S. 209, introduced in that body by Senator Rand Paul (R-Ky.).

H.R. 24 calls for “a full audit of the Board of Governors of the Federal Reserve System and the federal reserve banks by the Comptroller General of the United States.” There never has been any such audit in the Fed’s 101 years of existence. The companion Senate measure seeks identical openness. Both measures carry the title, “Federal Reserve Transparency Act,” the word “transparency” being what’s long been needed. And each of the bills requires that the audit be conducted within a year of final passage.

In his discussion about the need for this audit, Senator Paul noted that no “meaningful” audit of the Fed has ever been conducted. Less than honest and transparent scrutiny has been practiced under stifling restrictions, but Senator Paul and his colleagues want openness, not more cover-ups. To indicate how little is known about the Fed’s activities, he stated: “…when the primary auditor and overseer of the Fed was asked about $9 trillion dollars, the Inspector General had no clue what had been purchased.” After noting that the $9 trillion figure is more than half of the nation’s admitted indebtedness, he concluded, “The Federal Reserve is one of the most secretive institutions in our history.”

The Senate measure already has 30 co-sponsors, all Republicans but for Alaska’s Democrat Senator Mark Begich. Gaining 37 more Yes votes for the measure in the Senate (the number needed to reach the two-thirds plateau) will not be easy with Senate Majority Leader Harry Reid (D.-Nev.) strongly opposed to the idea.

A thorough audit of the Fed will likely lead to consideration of a subsequent measure calling for terminating the institution. Our nation needs sound money, not fiat currency generated by the secretive Fed that should never have been given the power it possesses. As more Americans realize that the once “almighty” dollar has shrunk in value from a worth of 100 cents in 1913 to a mere 2 cents today because of Fed action, pressure for abolishing it and returning to precious-metal-backed currency continues to grow. All who want openness at the Fed and sound money should be contacting both of the their senators to request support for S. 209.

Mr. McManus joined the staff of The John Birch Society in August 1966 and has served various roles for the organization including Field Coordinator, Director of Public Affairs, and now President. He remains the Society’s chief media representative throughout the nation and has appeared on hundreds of radio and television programs. Mr. McManus is also Publisher of The New American magazine and author of a number of educational DVDs and books.

Making the Case for Higher Inflation? Krugman’s Cockamamie Economics

Making the Case for Higher Inflation? Krugman’s Cockamamie Economics
by JBS President John F. McManus

A correct definition of inflation, something increasingly hard to find, appeared in “Webster’s New 20th Century Unabridged Dictionary (1957)”. It said that inflation is “an increase in the amount of currency in circulation, resulting in a relatively sharp and sudden fall in its value and rise in prices.” Note that what is inflated is the amount of currency. The effect of inflating the amount of currency is a rise in how much more of the less-valuable currency is needed to purchase anything.

In 1920, in a burst of youthful honesty, British economist John Maynard Keynes wrote a book entitled “Economic Consequences of the Peace.” In it, he correctly identified inflation as an increase in the amount of currency and then summarized, “By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens …. The process engages all of the hidden forces of economic law on the side of destruction, and does it in a manner that not one man in a million can diagnose.” Here we see that inflation constitutes thievery by government. Keynes, however, didn’t stand firmly by his correct 1920 attitude. His later twisted thinking greatly influenced President Franklin Delano Roosevelt and the socialistic New Deal of the 1930s.

Jump ahead to 1946 and the publication of economist Henry Hazlitt’s book “Economics in One Lesson.” It presents the absolutely correct definition of inflation. A prominent columnist whose work appeared regularly in Newsweek and other publications, Hazlitt minced no words when he wrote that inflation “tears apart the whole fabric of stable economic relationships. Its inexcusable injustices drive men toward desperate remedies. It plants the seeds of fascism and communism. It leads men to demand totalitarian controls.” The correctness of his dire forecasts was demonstrated in recent years as inflation ravaged Zimbabwe, Argentina and elsewhere. Hazlitt’s warnings should have been heeded in our country but they haven’t been listened to by most Americans. In our nation, inflation (courtesy of the Federal Reserve and a compliant Congress) continues to erode the value of everyone’s dollars.

Nobel Prize winner Paul Krugman writes about economic matters for the New York Times. On April 7th, without ever defining inflation, he told readers that more inflation is needed. He proposed a “compelling case for raising inflation targets above 2 percent.” In presenting “the case for higher inflation” he stated that “moderate inflation turns out to serve several useful purposes.” Not only did he rely on the false notion that inflation’s definition is rising prices, he proposed that America needs those prices to rise even higher.

No, Mr. Krugman. America needs honest money whose value can’t be manipulated by government, the Federal Reserve, or even by Nobel Prize winners. Americans also need a correct definition of inflation, not a confusing mishmash of highbrow economic verbiage that cloaks the real truth about thievery, solves no problems, and destroys the people’s wealth – in their paychecks, savings, pensions, insurance policies, investments, etc. The value of all dollars continues to sink, something every supermarket shopper experiences week to week and wonders why. The cause is inflation and its continuing toleration by a government that allows the Federal Reserve to produce a continuous stream of freshly created cash.

Could the people of our nation become desperate and “demand totalitarian controls” as Henry Hazlitt soberly suggested? The answer is obvious. But Paul Krugman doesn’t tell Americans what they need to know. Without the truth about inflation, the people will continue to worry about their future, maybe even begin to “demand totalitarian controls.”

Mr. McManus has written “Dollars & $ense,” a booklet explaining solutions to the economic meltdown.

Fed Creates Money; Food Prices Rise

Fed Creates Money; Food Prices Rise
by JBS President John F. McManus

The government claims prices are up only 6.4 percent since 2011. But a shopper trying to feed a family sees chicken up 18.4 percent, ground beef up 16.8 percent, bacon up 22.8 percent, and the price of fuel steadily rising. “The things that are going up in prices are the things I absolutely need to buy,” laments homemaker Jen Singer in a report published by CBS News.

What causes these increases? Sadly and mistakenly, Ms. Singer refers to her problem only as a rise in prices of the goods she needs. She seems unaware that the real problem is the eroding value of her dollars. With precious few exceptions, the staples she buys for herself and two teenage sons haven’t risen in price; the changes she bemoans are due to theft of the value of her dollars. The thieving culprit is a partnership between the Federal Reserve and the U.S. government that manages a slick form of thievery.

In July 2011, the Government Accounting Office (GOA) issued a report doggedly pried out of hiding by Bloomberg News. It showed that the Federal Reserve had created at least $16.1 trillion to shore up the mega-banks after the 2008 banking crisis. Recipients of the bailouts, in round figures, included Citigroup $2.5 trillion, Morgan Stanley $2.04 billion, Merrill Lynch $1.9 billion, and Bank of America $1.3 billion. Slightly lesser amounts in the hundreds of billions were supplied to Barclays, Bear Stearns, and Goldman Sachs. Foreign banks, benefitting from the Fed’s money creation, were Arab Banking Corp., Bank of China, France’s Societe Generale, Japan’s Norinchukin Bank, Germany’s Deutsche Bank AG, Dublin’s Depfa Bank Plc, and Dexia SA in Brussels.

All of this was money that didn’t exist previously. It acquired value by stealing a portion of all existing dollars. The process has long been correctly described by Soviet dictator Lenin, British socialist John Maynard, and others. Both Keynes and Lenin could be classified as champions of honest money.

While this thievery was occurring, an awakening House of Representatives approved H.R. 1207 by a vote of 223-202 in December 2009. It called for an audit of the Federal Reserve, something that has never been done in the Fed’s 100 years of existence. The House bill, however, was gutted by the Senate in a 62-37 vote led by Vermont’s Senator Bernie Sanders, the proud and admitted socialist who regularly votes with the Democrats. His major helpers in continuing the gigantic cover-up were Senators Harry Reid (D-Nev.) and Charles Schumer (D-N.Y.).

Not only food but just about everything else, certainly including the fuel needed to heat homes and run businesses, costs more of everyone’s less-valuable dollars.

Government personnel, Federal Reserve officials, and their allies in the main stream media steadfastly refuse to tell the American people two very simple truths: 1) rising prices are the effect of inflation, and 2) what is being inflated is the amount of dollars created by overworked printing presses and computer entries. If Americans understood these truths, the process would stop.

Either it stops or America will grind to a halt. It won’t take an invading foreign army to destroy this “land of the free and the home of the brave.” All that’s needed is a few more years of the kind of economic treachery we have just described. After that, America will beg for mercy from others because it will have ceded what remains of its independence and freedom.

Learn more at our “Restore Constitutional Money” page, as well as watching Dollars & $ense, featuring the author of this post: