I’ve been thinking about Jekyll Island. Actually I’ve been thinking about the Federal Reserve Bank(ing) system, the US Constitution, questions, secrets, the money supply, more questions, the coming Quantitative Easing 2, and still more questions. A group of the highest notables in economics and finance (from Wall Street) recently came together for “a conference” at Jekyll Island, Georgia. There has been minimal press coverage on this gathering despite the potential implications for ALL of the US population, the US dollar, and our future well being. We know that Greenspan was one of the current speakers and that the gathering was to commemorate a meeting held there some 100 years ago.
You see in the panic of 1907, the most illustrious of the major banks in New York City were almost brought to their knees and forced into liquidation. There was NO FDIC to insure deposits, there was NO American Central Bank to facilitate a bailout, and the Congressional hands were tied because the public would not stand for any overt bailout of the big boys of Wall Street. Something HAD to be done, so Congress authorized “a committee” to look into the financial mess in 1908 in the hopes of preventing any future reoccurrence. A group of the “best and the brightest” financial minds from the US and Europe began discussions in private.
The “informal” and highly secret meetings were getting nowhere slowly. “It” was decided that a meeting must be held and would continue until an agreement could be hammered out. Secrecy was of the essence. In November of 1910 the crème de la crème of financiers boarded “private and sealed” rail cars in Hoboken, New Jersey. They headed South. Jekyll Island was a private hunting club off the Georgia Coast. It was secluded, secure, and was the most exclusive “club” in America. One sixth of the world’s total wealth at the time was owned/ controlled by its members. Nelson, Abraham, Frank, Henry, Charles, Benjamin, and Paul were among those on the train. First names only were used to maintain the secrecy, and besides, they all knew each other anyway. At this gathering, the plan for the Federal Reserve Banking System was hammered out. It would take THREE more years to get this central “bank”, and “revisions” to the US money supply approved by Congress and signed by President Woodrow Wilson. Was such a fictitious entity legal? The US Constitution authorizes only the Federal Government to coin (and print) money. Nowhere was such an entity envisioned by the Constitution.
Ninety-seven years later a public debate on the FED continues. Those of the Tea Bag Party who surged in last week’s interim elections see the FED as the problem, and NOT the solution. They will seek blood. We the people... know very little about the FED. We know it may be national, but it is NOT Federal. We know it has NO ”reserves” to back up anything it does. And, we know it is a clearly NOT a bank! We know it is a privately held corporation, but we have never been told who are the shareholders?
We know it charges fees for its services, but we are NOT told how much those are. We do NOT know how much it makes, how those incomes are distributed to the unknown shareholders, or what if any constraints are placed upon its monetary and fiscal policy? And, by the way, it is exempt from all Federal and State tax liabilities! It holds no potential liability for its actions. The “full faith and credit” of the United States of American (meaning the future US ability to tax its citizenry) is the only backing behind the currency. It also controls (and sets) all the interest rates. Since 1913 under its direction, the US Dollar has lost 95% of its purchasing power. Panics, recessions, and the Great Depression continued under its reining of the US Dollar --- I mean the Federal Reserve Note. So, just what has it accomplished by presiding over all those bailouts?
In the past three years the FED has NOT been able stave off (much less solve) our current recession/ depression problems. Prior policies of creating any new and larger economic bubble to fix the problems of the most recent past bubble have accomplished NOTHING! OK, they have once again served to bailout the major Wall Street financial interests. This has been their only accomplishment on going in the past ninety-seven years. What has the FED accomplished for the people of Main Street?
For decades Uncle $ugar has spent more than he takes in. We are borrowing an ADDITIONAL $4 BILLION a day to meet the costs of our wars, our entitlements, or pork projects, our earmarks, and our trade deficits. Problem is the rest of the world is no longer willing to lend US/ us back our money to underwrite our profligate spending and consumption. The FED’s solution is for them to print still more money (out of thin air) and buy up the new Treasury securities “auctioned” every Tuesday. Uncle’s right hand is now buying $600 BILLION (for now) from his left hand. The FED calls this Quantitative Easing 2 (QE2). Remember QE1? That was when the FED (printed money and) bought back $800 BILLION in worth less, and worthless investment paper from the banks which they will hold until the troubled banks decide to buy them back. QE2 will work no better than QE1. It will endanger the last 5% of the value left from the pre-1913 dollar. It all began on Jekyll Island!
I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.
Copyright 2010 Questions, Inc. All rights reserved. Fred Cederholm is a CPA/CFE, a forensic accountant, and writer. He is a graduate of the University of Illinois (B.A., M.A. and M.A.S.). He can be reached at firstname.lastname@example.org.
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This story was published on November 8, 2010.