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.
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.
Mr. 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
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.
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.
Audit the Federal Reserve: Support H.R. 24
By JBS President John F. McManus
On January 3, 2013, Congressman Paul Broun (R-Ga.) introduced H.R. 24 entitled “Federal Reserve Transparency Act.” It calls for audits of the Board of Governors of the Federal Reserve and the Federal Reserve Banks. And it further calls for those audits to be provided to Congress.
As of May 9, 2014, H.R. 24 has 228 co-sponsors. This means that more than a majority of the members of the House of Representatives has formally indicated a desire to remove the cloud of secrecy under which the Federal Reserve has operated during its 100 years of existence. (An act of Congress created the Fed in 1913.)
Even though similar numerical support for an audit has been gained in two predecessor congresses, a meaningful audit that counts more than desks and pencils has never been conducted. Secrecy continues to prevail and the Fed’s officials continue to maintain that its “independence” requires that it operate behind closed doors.
When the Fed began in 1913, the dollar was worth 100 cents. Its value has steadily declined so that now, according to numerous monetary specialists, its worth is approximately two cents. In other words, the price paid in dollars for an item in 1913 has risen by a factor of 50 times. “Dollars aren’t worth what they used to be,” can be heard from coast to coast and beyond. Credit the Federal Reserve!
In Article I, Section 8, the U.S. Constitution grants Congress power to “coin money.” No power was given to create or issue money, and certainly none to pass on illegitimate power to a private entity such as the Fed. But this is where we are. Without a thorough audit of the Fed, we don’t know who owns it, where it delivers much of the funds it creates out of thin air, and a great deal more. Intolerable? You bet.
When the Fed got started, the U.S. Treasury was issuing paper money redeemable in the government’s gold. That process died in 1933 when President Roosevelt took the nation off the gold standard. The Treasury was then issuing silver certificates backed by silver in the government’s vault. That process ended during the Richard Nixon era. Now we have Federal Reserve Notes backed by nothing and, because they have nothing behind them, the amount that can be printed and inserted into the system is unlimited. Totally unbacked paper bills flooding the nation take on value by acquiring some value of all existing bills. In simple terms, the erosion of the dollar’s value is Fed-created thievery.
If the power possessed by the Fed remains unchallenged, the dollar will continue its slide toward nothingness. Karl Marx wanted a central bank that would destroy freedom. The looming national catastrophe desired by Marx would inevitably result in reliance on some new form of world currency, something being proposed by the United Nations. And our nation would no longer be independent and free. Having the Fed audited is a major step toward averting such a tragedy.
The current attempt to audit the Fed is likely to run into the same blocking wall as in the past unless more people demand that the secrecy cease. While it’s somewhat comforting to know that more than half of the House membership is formally on record wanting “transparency,” having a majority isn’t enough. H.R. 24 must be enacted by the House and then by the Senate. Has your congressman co-sponsored H.R. 24? What about your two senators? Are they willing to put their portion of Congress on record issuing a similar demand? Contact them today!