I just concluded an interview with President Woodrow Wilson about a secret power in the U.S. and he has introduced me to President Andrew Jackson whom I will interview about banking. Leading into that interview is the conclusion of my interview with President Wilson.
Author: Mr. President. If you are correct, and I believe you are, then our nation has become even more threatened by that "power" than when you first wrote of it. Mr. President. I also believe that you may have inavertently increased the power you speak of by signing into law, the Federal Reserve Act and creating a private corporation to be our central bank. I would like your views of Central Banking.
Pres. Wilson: Well, Mr Burr, maybe it would be better to speak to one of our Presidents who had such strong views on this subject that he got one of the three central banks the United States has had, removed. President (Andrew)Jackson could you step over here for a moment (in a whisper, "we still call him ol' Hickory), . This is a friend of our nation, Mr. Jan Burr, from the future, 2010, who has some questions about central banking.
President Andrew Jackson: "It is to be regretted that the rich and powerful too often bend the acts of government to their own selfish purposes."
Author: It is such a pleasure to meet you. I am deeply honored. President Wilson says you were responsible for ending one of our central banks. I would like to know more about this, specifically why you felt ending it was so important.
Pres. Andrew Jackson:
A private central bank issuing the public currency is a greater menace to the liberties of the people than a standing army.
Author: Those are pretty strong words, Mr. President. Why do you say that?
President Jackson: Well, some of what I said when I vetoed a bill to extend the Central Bank's authority may be appropriate at this time.
The present corporate body, denominated the president, directors, and company of the Bank of the United States, will have existed at the time this act is intended to take effect twenty years. It enjoys an exclusive privilege of banking under the authority of the General Government, a monopoly of its favor and support, and, as a necessary consequence, almost a monopoly of the foreign and domestic exchange. The powers, privileges, and favors bestowed upon it in the original charter, by increasing the value of the stock far above its par value, operated as a gratuity of many millions to the stockholders.
An apology may be found for the failure to guard against this result in the consideration that the effect of the original act of incorporation could not be certainly foreseen at the time of its passage. The act before me proposes another gratuity to the holders of the same stock, and in many cases to the same men, of at least seven millions more.
More than eight millions of the stock of this bank are held by foreigners. By this act the American Republic proposes virtually to make them a present of some millions of dollars. For these gratuities to foreigners and to some of our own opulent citizens the act secures no equivalent whatever.
Author: So, you think their primary goal was their own profits and benefits from the agreement, not the actual health of the nation?
Pres. Jackson:
Every monopoly and all exclusive privileges are granted at the expense of the public, which ought to receive a fair equivalent. The many millions which this act proposes to bestow on the stockholders of the existing bank must come directly or indirectly out of the earnings of the American people.
It has been urged as an argument in favor of rechartering the present bank that the calling in its loans will produce great embarrassment and distress. The time allowed to close its concerns is ample, and if it has been well managed its pressure will be light, and heavy only in case its management has been bad. If, therefore, it shall produce distress, the fault will be its own, and it would furnish a reason against renewing a power which has been so obviously abused. But will there ever be a time when this reason will be less powerful? To acknowledge its force is to admit that the bank ought to be perpetual, and as a consequence the present stockholders and those inheriting their rights as successors be established a privileged order, clothed both with great political power and enjoying immense pecuniary advantages from their connection with the Government.
It is easy to conceive that great evils to our country and its institutions millet flow from such a concentration of power in the hands of a few men irresponsible to the people.
Is there no danger to our liberty and independence in a bank that in its nature has so little to bind it to our country? The president of the bank has told us that most of the State banks exist by its forbearance. Should its influence become concentered, as it may under the operation of such an act as this, in the hands of a self-elected directory whose interests are identified with those of the foreign stockholders, will there not be cause to tremble for the purity of our elections in peace and for the independence of our country in war? Their power would be great whenever they might choose to exert it; but if this monopoly were regularly renewed every fifteen or twenty years on terms proposed by themselves, they might seldom in peace put forth their strength to influence elections or control theaffairs of the nation. But if any private citizen or public functionary should interpose to curtail its powers or prevent a renewal of its privileges, it can not be doubted that he would be made to feel its influence.
Author: Yes, I can see why you felt as you did. Have you any thoughts on the Central Bank we have now?
President Jackson: Well, I would say about them, what I said about the central bank of my time.
Controlling our currency, receiving our public moneys, and holding thousands of our citizens in dependence, it would be more formidable and dangerous than the naval and military power of the enemy.
If we must have a bank with private stockholders, every consideration of soundpolicy and every impulse of American feeling admonishes that it should be purely American. Its stockholders should be composed exclusively of our own citizens, who at least ought to be friendly to our Government and willing to support it in times of difficulty and danger.
President Jackson's Veto Message Regarding the Second Bank of the United States
Author: Would you call them a "den of vipers" as you did your central bank backed by the Rothschilds and other foreign owners?
Pres. Jackson (smiling): Let's just leave it at what I said, as I am much more familiar with the people that were involved with the central bank of my time, than I am with those that own your central bank.
Author: Excuse me Mr. President but, I see President Franklin D. Roosevelt coming in the door. Would you be so kind as to introduce me to him as I have a question for him, too.
Author's note:
The words of the Presidents in quotes are their actual words from the site listed below their comments. I have placed some of their comments in bold as I believe they focus on some key points they are making. I have written this as I did, to show how little has really changed. Human nature is such that the people of nations, seem to keep making the same mistakes they have made before or that other nations have made before. Some of our greatest leaders saw these reoccurring mistakes and attempted to remedy them only to see future generations "overrule" their wisdom and make the mistakes anyway.
What I learned from the Interview
The first thing I learned is that the fears about central banking then, are just as relevant today. When you can control the money supply of an individual, corporation, city, state, or nation, you have great power. To get the loans you need or believe you need, you have to comply with the rules set by the lender, or you don't get the money. If you need a loan, and nobody will lend to you, you can't do what you need to. At the same time, if everybody lends to you and doesn't require adequate collateral or is in a position to raise the rate of interest, you can be at great risk if you don't fully understand what is going on.
Whether it is a corporation, city, state, or federal government, the first place to look to start understanding the risks, concerning debt, is at the personal level. If your income doesn't allow you to pay the interest on your debt, it doesn't matter how much debt you have, it is an unsustainable situation. The lender is going to foreclose on the collateral because he isn't getting the interest he is due.
Many cities and states are technically bankrupt. We already have at least two states, Illinois and California that have not paid all their bills. One reason is that they have to keep paying the interest on their debt or they will be in default and unable to get future loans in all likelihood. Just as if you default on your personal loans and then go and look for a new loan, your record of default is going to greatly limit the chances of getting a new loan, cities and states face this same problem.
Many cities and states in this condition are stiffing the public in various ways, including not paying bills or, like in Medicaid and Medicare, add extra cost jumping through hoops and then still paying a smaller amount on the bill submitted, anyway. I am not saying there isn't fraud. I am saying that our governments, city, county, state and federal government are desperate and often are not honoring obligations like they should so they can keep paying the interest on debt that they can't get out of.
The Central Bank creates Federal Reserve Notes, meaning they are a debt obligation. Where does the interest on that obligation go? Remember first, that the Federal Reserve Bank is a private corporation and while it has government oversight, it is still a private organization and is "owned" by its shareholders.
Commercial banks that are members of the Federal Reserve System hold stock in the Reserve Bank in their region, but they do not exercise control over the Reserve Bank or the Federal Reserve System. Holding stock in a regional Reserve Bank does not carry with it the kind of control and financial interest that holding publicly traded stock affords, and the stock may not be sold or traded. Member banks do, however, receive a fixed 6 percent dividend annually on their stock and elect six of the nine members of the Reserve Bank's board of directors.
Although they are set up like private corporations and member banks hold their stock, the Federal Reserve Banks owe their existence to an act of Congress and have a mandate to serve the public. Therefore, they are not really "private" companies, but rather are "owned" by the citizens of the United States.
Frequently Asked Questions: Federal Reserve Banks
Well, we also "own" corporations across the nation but, that doesn't mean we control what they do unless we attend the "meetings," and demand as a majority, what we think is best. It is the same thing with the Federal Reserve Bank and how monetary policy is determined. Notice the contradiction in that paragraph about not having control and then the comment that they elect the people who do control what goes on. One good thing in the system is that each member bank gets only one vote, no matter how many shares of Federal Reserve stock they own. But, due to "interbank lending," I wonder how well that system works and whether or not the "too big to fail" banks have some influence on the voting of other member banks. I hope not and based on some of the counter-policy comments that come from various district Fed Governors, at times, may find my concern unjustified.
The seven Board members constitute a majority of the 12-member Federal Open Market Committee (FOMC), the group that makes the key decisions affecting the cost and availability of money and credit in the economy. The other five members of the FOMC are Reserve Bank presidents, one of whom is the president of the Federal Reserve Bank of New York. The other Bank presidents serve one-year terms on a rotating basis. By statute the FOMC determines its own organization, and by tradition it elects the Chairman of the Board of Governors as its Chairman and the President of the New York Bank as its Vice Chairman.
The Board of Governors of the Federal Reserve System
Let's look more closely at the New York Reserve Bank as it is where the bulk of our money control is administered. It is the most powerful member of the Reserve System, by far.
The Federal Reserve Bank of New York is one of 12 regional Reserve Banks which, together with the Board of Governors in Washington, D.C., make up the Federal Reserve System. The Fed, as the system is commonly called, is an independent governmental entity created by Congress in 1913 to serve as the central bank of the United States. It is responsible for
* formulating and executing monetary policy,
* supervising and regulating depository institutions,
* providing an elastic currency,
* assisting the federal government's financing operations, and
* serving as the banker for the U.S. government.
....In addition to responsibilities the New York Fed shares in common with the other Reserve Banks, the New York Fed has several unique responsibilities, including conducting open market operations, intervening in foreign exchange markets, and storing monetary gold for foreign central banks, governments and international agencies. Foremost among its functions is the implementation of monetary policy, one of the three missions of the New York Fed. The other two are supervision and regulation, and international operations.
....The New York Fed, representing the Federal Reserve System and the U.S. Treasury, also is responsible for intervening in foreign exchange markets to achieve dollar exchange rate policy objectives and to counter disorderly conditions in foreign exchange markets. Such transactions are made in close coordination with the U.S. Treasury and Board of Governors, and most often are coordinated with the foreign exchange operations of other central banks. Dollars are sold in exchange for foreign currency if the goal is to counter upward pressure on the dollar. If the objective is to counter downward pressure, dollars are purchased through the sale of foreign currency.
The Federal Reserve Bank of New York: What We Do
This information in the last two quotes is taken directly from Federal Reserve sites. They are not from some conspiracy site or opinion site. I try to limit the sources I provide, as much as possible on information like this, to government sites if available.
What you see here is that we can "manipulate" the dollar up or down based on the goals of the money suppliers. This creates instability that can affect interest rates for savers or investors or the growth of the economy. While many may believe that the manipulation is justified to achieve growth, it is putting the horse before the cart. Congress, not the federal reserve should be creating the policies that create sustainable growth unlike the Federal Reserve that usually ends up creating "boom/bust" cycles and bubbles that they say "nobody could have seen them coming." Yet, each time, we did have economists in the private sector that did see them coming and warned people of them, including Congress.
I could spend hours on the things I have learned about; the ownership of the member banks (who are owned by wealthy entities, including foreign entities) who in turn own the Federal Reserve; or information on U.S. debt purchased through back door deals with money created out of thin air (admitted to in Congress by Bernanke); or currency swaps with other central banks where in one case, Bernanke claimed he didn't know what the 14 Central Banks did with the 1/2 a trillion dollars he gave them in a currency swap, but I will instead sum it up this way.
The Central Bank can't be run with "good intentions." It can't be run by men who have banking interests above the health of the nation (they believe of course, that the health of the banks is a top priority because they say the banks must prosper and lend, for the nation to prosper). While it is true we need a healthy banking system we also need one that is run ethically and properly regulated. We need a banking system that has not only oversight of the banking operations but, punishment of the individuals who operate unethically or illegally or who don't follow the regulations that have be set down for them to follow. (I prefer a constitutional amendment that sets the limits of the central bank, sets the oversight and auditing and prevents congressional changes when the parties change control of Congress, in short, a central bank controlled by the Republic, not member banks owned by people with self-serving interests like President Jackson warned of)
Another problem with our Central Bank is the "dual mandate."
According to this legislation, the Federal Reserve's mandate is "to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates." Because long-term interest rates can remain low only in a stable macroeconomic environment, these goals are often referred to as the dual mandate; that is, the Federal Reserve seeks to promote the two coequal objectives of maximum employment and price stability.
Governor Frederic S. Mishkin: Monetary Policy and the Dual Mandate
Proper money supply is, of course, going to keep prices stable as long as supply and demand is in balance through market actions. If we have a drought and no wheat, then even though the rest of our prices may not rise, goods that have ties to wheat are going to go up. It is not this area that concerns me as much as the 2nd part of the mandate.
Due to lag factors, globalization, technological advances, demographics (boomer population retiring), immigration policies that may add too many workers to the work force, etc., the Federal Reserve is not where employment should be addressed at all. That needs to come from Congress and the policies they legislate. Money supply, used to create enough force on the nation to cause full employment will lead to other imbalances like we saw in the tech and housing bubble. 42% of job growth in the housing bubble was tied to housing and that was not only not sustainable, but has led to the worst recession since the great depression and may lead to another depression.
Yes, it created jobs eventually, with the money supply policies that were being used but, due to the lag factor in employment, also created a very unsustainable situation. The same thing happened with the tech bubble. While tax revenues and job creation, in total, were appearing to be very good, again, they were unsustainable. Also, in the background of the full employment, were some very troubling trends going on in manufacturing.
Nondurable manufacturing employment peaked at 7.9 million workers in January 1995. Components that peaked under Clinton included: food and kindred products (October 1995); textile mill products (November 1994); printing and publishing (May 1998); and rubber and miscellaneous plastics (February 2000). Many of these jobs were once concentrated in the South.
Durable manufacturing peaked at 11.2 million workers in April 1998. Components that peaked under Clinton included: lumber and wood (February 2000); furniture and fixtures (July 2000); primary metals (January 1998); fabricated metals (July 2000); industrial machinery and equipment (March 1998); electronic and other electrical equipment (November 2000); transportation equipment (October 1998); instruments and related products (March 1998); and miscellaneous manufacturing (April 1998). Some of the largest durables goods employment is in the upper Midwest.
The Clinton Manufacturing Recession
While the article, to me, appears biased and an attack on the Republican Congress and Clinton Presidency of the 90's, the facts are that we were still undermining manufacturing with an illusion of growth created with a bubble. Instead of blaming President Clinton or the Republican Congress, we should be looking at the decades of bad monetary and economic policies that they were continuing to use and that Federal Reserve intervention in markets to get full employment, were causing. Even while creating the illusion of growth with full employment, they had created a time-bomb that would explode as President Bush arrived on the scene.
Whether you agree with how President Bush spent (military which employs millions) or the tax cuts (needed for stimulating private sector growth like President Kennedy reminded us of), not spending would have meant a depression. Then, add the easy money policy of the Federal Reserve and you ended up with another bubble that was born because we were attempting to use monetary policy to achieve full employment.
If you are going to have a central bank, set proper limits on it and keep the role to proper money supply, not things like "full employment" which is the job of Congress. Those policies are what, in the long run, are needed if we want stability and sustainable growth. Constantly adding more programs, more tax lines to the 17,000 page tax code, more changes in subsidies or grants or other manipulations to the market forces causes more and more businesses to seek another nation that is more stable, to conduct its business in. Business looks for "pro-growth" of the sector it is in, not a nation where the government "targets" who gets the pro-growth policies. They look for a nation where the central bank is limited in what it can do in ways that are at least more stable than what we have.
Above all, any banking system has to be run by ethical, moral and patriotic people or the nation is placed at just as great a risk as occurred in the time of President Jackson.
Jan Paul Burr
Part II An Interview with President Eisenhower on the military complex and his concerns
Part III An Interview with President Kennedy on his belief in tax cuts to grow the economy
Part IV An Interview with President Wilson on a dangerous "power."
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