Wednesday, April 06, 2011

How To End the Federal Reserve System ~ by Gary North

How To End the Federal Reserve System

by Gary North

Recently by Gary North: You Could Become an Amateur Historian . . . and Get a Promotion

Things are not always as complicated as they seem. With respect to the Federal Reserve System, it is a deliberate mystery. It was deliberately designed in 1910 to deceive the public, who were opposed the idea of a central bank. The conspirators who met on Jekyll Island in November 1910 knew this. They did good work from their point of view. They concealed the beast.
The general public today knows little about the FED. Prior to Ron Paul's Presidential run in 2007-8, far fewer people understood it.
I have been asked: "How could we get rid of the Federal Reserve? What will replace it?" The answer: either the free market or Congress.
People who think of themselves as free market people often are not. The tax-funded public schools and the state-regulated and accredited university faculties have taught that the modern system of intrusive civil government is necessary for an orderly society. People cannot imagine a market-based society.
There is an old saying, "You can't beat something with nothing." But the free market social order is not nothing. It is expanding around the world, which is why the world is getting richer.
At the Federal level, a free market social order in banking existed prior to 1914. That was back when the dollar was worth over 20 times what it is worth today. On this point, see the inflation calculator of the Bureau of Labor Statistics.
We can go back to that system. We will go back to it. The question is: When? The other question is: At what price?
ENDING THE FED BY LAW

Ron Paul could introduce a bill to end the Federal Reserve System. He could call it: "The Monetary Liberty Act." It would get known as the "End the Fed Act." Here is what the text might say.

The Federal Reserve Act of 1913 is hereby repealed. So are all subsequent acts based on the Federal Reserve Act of 1913.
All authority of the Federal Reserve System to act in the name of the United States government is hereby revoked.
The assets of the Board of Governors of the Federal Reserve System, which are already the property of the United States Government, are hereby transferred to the Department of the Treasury. This includes all of the assets listed on the balance sheet of the Federal Reserve System.
The twelve (12) privately owned Federal Reserve Banks will return all assets held in trust for the United States government within thirty (30) calendar days of the signing of this bill into law.
The gold reserves of the United States government that are held in storage by the Federal Reserve Bank of New York will be transferred to the Government's depository at Ft. Knox, Kentucky, within one calendar year after this bill becomes law. The Government Accountability Office will conduct an inventory of the gold held in storage by the Federal Reserve Bank of New York before and after this transfer.
The Board of Governors will vacate the premises of the Federal Reserve building within thirty (30) calendar days of the signing of this bill into law.
Any pension fund assets of the employees of the various Federal Reserve Banks will remain under the control of those banks. All pension obligations under the authority of the Board of Governors of the Federal Reserve System are hereby transferred to the Department of the Treasury, to be administered under the retirement program of the Department of the Treasury.

This is simple. The Board of Governors of the Federal Reserve System is a government agency. Its authority would be transferred to the U.S. Treasury.

The dozen Federal Reserve Banks are privately owned. All authority of these 12 banks that derives from their connection to the Board of Governors will cease. If they can make a profit, fine. If not, equally fine. The free market will determine which will survive and which will not.
Is this radical? Not at all. There are two historical precedents: the refusal of Congress to renew the charter of the Bank of the United States in 1811, and the refusal of Congress to renew the charter of the Second Bank of the United States in 1836. Both of them went bust.
The standard response is that there must be independence between the Federal Reserve System and the U.S. government. Let us apply this to other agencies:

The Department of Defense
The Department of the Treasury
The Department of State
The Department of Education

I could go on, one by one, to list all of the thousands of agencies that are funded by Federal taxes and which operate by means of the authority of the U.S. government. Only one government agency is defended by publicists, both on and off the payroll of the Federal Reserve System, as deserving to be independent of the government that has transferred authority to it: the Board of Governors of the Federal Reserve System.
The phrase, "the independence of the Federal Reserve System," is a code phrase for "the independence of the four largest U.S. banks from the threat of losses." A growing number of voters has figured this out since the fall of 2008. This is why the Federal Reserve System is facing public criticism for the first time since 1914. This criticism will grow.
All of this may seem Utopian. Ron Paul could not get Congress to audit the FED, which by law possesses this authority. The Congress has been in the hip pocket of the FED for almost a century. The Congress lets the FED run the nation's economy.
But as criticism spreads, there will be more voters who figure out what the FED is and has always been: a government-created cartel of the banks. It operates for the benefit of the largest banks.
Will Ron Paul get such a law passed by Congress and signed into law? No. Does this mean that the FED is forever untouchable? No.
We need the following:

1. A wave of price inflation caused by the FED
2. A subsequent recession caused by the FED
3. A depression caused by the FED
4. A wave of outage in response to the FED
5. An endless series of criticisms of the FED

This will result, ultimately, in the abolition of the FED. Whatever replaces it will decide the economic fate of Americans: Congress (hyperinflation) or the free market (economic stability).

But could the free market replace the FED without a catastrophe following? Yes. We are already seeing this in another sector of the economy.......................
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