Most Americans have absolutely no understanding of the Federal Reserve or its operations. The veil of secrecy surrounding the Federal Reserve’s operations has been orchestrated for a very good reason. If the American people ever found out that the Federal Reserve is unconstitutionally counterfeiting the American dollar in order to give it to their banker friends, there would be a public outcry. I say unconstitutionally because Article I Section 10 of the Constitution states: “No state shall….. make anything but gold and silver coin a tender in payment of debts.” The Tenth Amendment also states that if a power is not “delegated to the United States by the Constitution,” it doesn’t exist. And there is absolutely nothing in the Constitution about a central bank or Federal Reserve. In fact, the Founding Fathers were quite clear about their disdain for fiat currencies, which has been expressed in many of their writings.
The method the Federal Reserve is currently using to bail out their banker friends is quite clever. They have a discount window loaning nearly unlimited funds to the big banks at between 0-.25% interest rates, and then allowing those same banks to buy 10 year t-bonds at 2-3% interest with many multiples of leverage. This strategy should be risky because the value of those t-bonds could fall and the leverage could wipe out any profit and lead to heavy losses, but fortunately for elite bankers the Federal Reserve has assured them that they will buy an unlimited amount of t-bonds to keep the value on par with their original investments. The Federal Reserve has stated on record that they are going to be rolling their short term t-bonds into long term t-bonds and if you look at the yield of ten year t-bonds over the last year, they have dropped quite consistently from 3.2% to under 2% yield even though America’s credit has been downgraded, its debt has exploded with its deficits, unemployment is high, and commodity prices are soaring. Normally these would all be inflationary and cause the treasury bond yields to skyrocket, which would send the prices down and therefore cost the bankers money, but the Federal Reserve is printing money and buying those t-bonds to ensure the yields stay low so their banker friends have a guaranteed return.
This secret bailout is one of the contributing factors to a freeze on lending. Lots of small business and potential homebuyers with good credit are complaining that the banks aren’t loaning money. And why would they loan money to people who bring an element of risk with them when they are being guaranteed a huge return by the central bank? The Federal Reserve is printing the hell out of the American dollar and giving them to their banker friends who have gotten fabulously wealthy by investing in the mortgage backed securities that perpetrated this crisis, and are now reaping the benefits of the fallout as well. In fact, the Federal Reserve has increased the money base 28% over the last two years and the M2 money supply 13%. This is a direct tax on the American people as their money is inflated and their purchasing power has decreased. This is in part why gold costs $1600 an ounce and oil is near $100 a barrel.
On a Personal level, FED policy makers are able to tell their friends and family members about interest rate and policy decisions before the minutes of the meetings become public. This inside information provides an incredible economic advantage for those lucky enough to be part of the privileged elite. While the mutual funds that hold our retirement money throw darts at a board, this cartel of banking elites gets to play poker with an opponent who has his cards face up.
With no accounting or oversight for many of its major functions, the Federal Reserve has an unlimited ability to cut back room deals with other international bankers, that carry no legal consequences or public backlash. The public can only speculate as to the level of fraud and theft that is being perpetrated against the American people. As Ron Paul says, we need to audit and end the Fed immediately.