STAFF NEWS & ANALYSIS
More Central Bank Transparency Is Inevitable
By Staff News & Analysis - March 05, 2015

Giving the Fed a hard time might have a point … The transcripts of the highly significant 2009 meetings of the monetary-policy-setting Federal Open Market Committee are out today, after a five-year delay, and generating lots of headlines. These transcripts, and their release schedule, are as best I can tell unique in American government. They're also very valuable. The five-year delay is long enough that participants don't have to worry about their statements affecting markets or exposing them to immediate criticism, but short enough that the transcripts are often still relevant to current debates. – Bloomberg

Dominant Social Theme: Criticizing the Fed will create a healthier one.

Free-Market Analysis: Bloomberg has been running a series of editorials defending the Federal Reserve and criticizing those who are supporting various congressional bills to pry it open. This article is a little different because it takes the position that some additional sunlight could be a positive thing.

But even granting this is accurate, the article presents other puzzling perspectives. We've been following these editorials because they show the cognitive dissonance that lies at the heart of modern Western civilization.

The creation and circulation of money-stuff is of primary importance and when a culture is built around a process that is significantly deceptive, then gradually society itself begins to rot. This is because the finest minds and most successful individuals eventually come to understand that their societies are being perverted by a false system.

It is a poison that infects each part of the body-politic over time: education, the media, industry, commerce and, of course, the political process itself. As a result, the most gifted people of each generation realize that to succeed, they must lie compulsively. They must never tell the whole truth. They must temporize. In the 21st century, this is evident in what we call "directed history" – the idea that technocratic experts can manage entire cultures.

The cult of the expert, as we have pointed out, is an integral part of the larger deception. Paper certificates providing credibility must be handed out routinely via a corrupt educational system that supports the only thing that matters: the meme that monetary officials can see into the future with enough accuracy to entrust them with the power to guide multi-trillion dollar economies.

The emperor has no clothes. There is no possible way to justify giving a small group of good, gray men the day-to-day power to "fix" the price and volume of money going forward based on backwards-looking financial data.

In the modern era, central banks including the Fed have consistently held rates lower than they ought to be within the current fiat environment. In turn, this creates tremendous asset bubbles that eventually collapse, causing economic carnage. People lose their jobs, their homes, their marriages and their families.

In the US alone these days some 40 million are on food stamps and supposedly 90 million cannot find work or are likely working in the context of gray or black markets. The employment numbers are massaged: In fact, the head of Gallup recently claimed that US government statistics regarding employment were so optimistically skewed that they ought to be disregarded.

Over and over, repeated catastrophic booms and busts centralize bankrupt entrepreneurs, undermine valid entrepreneurial efforts and ensure that the best and most successful ventures can often be purchased at the cycle's low ebb for pennies on the dollar.

These are perhaps the underlying reasons for congressional discontent, though the actual bills now circulating tend to focus on Fed "transparency."

More:

The delayed transcripts seem like an elegant way of balancing the Fed's need for flexibility and confidentiality with the demands of representative government. How did this well-designed experiment in government disclosure come about? Under duress.

For years, the Fed denied that it even kept transcripts of the meetings. After sustained prodding from Texas Democrat Henry Gonzalez, the chairman of the House Banking Committee in the early 1990s, Fed Chairman Alan Greenspan finally fessed up and in 1995 started releasing the transcripts with a five-year delay. It was around the same time, also under pressure from Gonzalez, that the Fed first started even announcing its interest-rate decisions.

… The "audit the Fed" legislation now spearheaded in the Senate by Ron Paul's son Rand — officially, the Federal Reserve Transparency Act — has been getting the most attention. But there's also the Federal Reserve Accountability and Transparency Act, which would add a bunch of new reporting and oversight requirements.

It is, as the article explains, the Great Recession itself and its mind-numbing economic injuries that have given wings to current legislation. Fed officials are clearly worried that this time the tide is unstoppable and that their deliberations will be exposed to hitherto unimaginable scrutiny.

What Fed officials are really worried about, from what we can tell, is the naming of names when it comes to what institutions are the recipients of Fed largesse. Showing exactly where monetary giveaways are going will immediately puncture the century-old pretense that the Fed is a deliberative and apolitical institution.

It is surely a fact that as soon as names can be placed next to money flows, conflicts of interest will rise up with such obviousness that there will be no legitimate defense. The Fed will come a long step closer to being discredited as an institution and its individual members will be exposed to significant public criticism.

That's what the Fed fears, so far as we can tell – and rightly so. The Fed has the power to print money and also apparently to give it away to whomever the institution and its officials choose. If normal people had the power to print money and hand out trillions to their friends and acquaintances, wouldn't it be logical to conclude that significant abuses would result?

But as we said at the beginning of this article, the lies are so pervasive and embedded after a century of central-bank price fixing that the ramifications we've just presented are never fully discussed. This Bloomberg article, for instance, makes the case that more transparency will "make the Fed work better."

The overall impulse to press the Fed to explain itself better and be more accountable for its actions is perfectly understandable in light of the events of the past few years … The lesson of the FOMC transcripts is that Congressional Fed-baiters sometimes have a point, and that their pressure can make the Fed work better.

The cognitive dissonance is palpable, is it not? The Fed CANNOT work better. It is a price-fixing instrument that harms the economy as all price fixing instrumentalities inevitably do. Fed officials likely would not agree with this conclusion, either, as real exposure of their deliberations would probably destroy whatever credibility is left.

And yet, as we predicted years ago, Fed transparency is on the way. The Fed as we know it today is likely finished. The more transparency that is granted, the more public indignation will demand yet more.

After Thoughts

The Internet is a process not an episode. And these are unsettled times.

Posted in STAFF NEWS & ANALYSIS
  • A process not an episode indeed. Excellent article and an even better process, thank you. The looming question is whether Central Banks can be entirely eliminated, and honest, interest free Constitutional coinage be re-established, before the financial world collapses and everyone turns to the “authorities” for a “solution” to the problem that they (the One Bank and all her offspring) have intentionally created. I remain skeptical to say the least – so I will cling to the optimism present in this forum, like a lifeboat.

    • Thanks for the comments.

    • dave jr

      “…interest free Constitutional coinage be re-established,”
      Re-established? It is still there, legal to use, laying dormant. It is just buried in paper that needs to be burned away.

    • Bruce C

      The first and biggest step is in designing a replacement. The basic ground rules are that morality, honesty, and integrity cannot be legislated. Whatever system must be independent of human interference. A gold standard (I.e., one that maintains a fixed relationship between the currency and physical gold) only works as long as the monetary system adheres to it (e.g., pre’ 1971). The answer to the fundamental question of monetary theory must be answered and understood (i.e., At what rate should the money supply be increased? Or, worded differently, what should be the relationship between economic growth and the money supply? Hint: That may be a trick question, but that doesn’t invalidate it.)

      • FEEuser

        Do you mean that we need a “replacement” for the FED? If so, why would we need a “replacement”?

        Better to do away with it once and for all and with economic interventionism once and for all!

        Let’s not stop there, either. Secession will be the coup de grâce, and anarcho-capitalist societies will emerge out of the ashes like so many a phoenix.

  • A crooked system created by psychopaths, and for psychopaths, which then find puppet political and media psychopaths to present the Delusion of Democracy to the unwashed masses. Rand will get no traction in the crooked congress, and any bill will be vetoed by the half master, half slave overseer with the ‘pen and phone’ in the progressive plantation big house. You cannot grasp the scope of the PRIVATE Feral Reserve crime syndicate without reading “The Creature from Jekyll Island” by G Edward Griffin. End feudalist banking.

    • Bruce C

      The crazy thing is that the fiat “money”, fractional reserve, central banking monetary system HAS enabled outsized wealth creation for several generations. Debt has advanced “prosperity”, borrowing from “expected” future productivity, but it’s not sustainable. I don’t think anyone who glimpses the abyss will be willing to willingly take the plunge. It’s gonna be a grind. Hopefully it’s not going to be like trying to endure surgery without anesthesia because I don’t think most people can stand that, especially if a syringe of morphine is dangled in front of them all the while. It’s gonna be wild.

  • dave jr

    It isn’t hard to notice that all criminal, gang or mob syndicates are always very worried about naming names. So when the Fed prefers to operate in the shadows, they are choosing their environment. They are announcing their affiliations. Not at the institutional level, but the overall character of the affiliations. They are not protecting the market or the economy. They are protecting themselves, centralization, monopolization, the cronies, wall street and captured treasuries. They are protecting their agents, the likes of Golden Sacks. They are protecting global centralized banking practices in general. They do not want to preannounce interest rate changes because of negative market impacts. They don’t want to announce because it would be easier for all to see the wielding of this confiscated power. It is better for them at this point for people to believe that interest rates are dictated by the market. To believe that wholesale damage comes about naturally through business cycles, and they are here to mitigate it. Old man Rothchild lied when he said he cares not who writes the laws. Look around. See how his empire has captured central governments of the developed world in his web of debt. See how he has enabled them to operate way beyond their means. See the nightmare of a regulatory quagmire convulsing in selective enforcement. Justice be damned, their money rules. Money is power and apparently the human condition allows this to be managed.

    • When you, and you alone can create money from thin air, you will inevitably end up owning the politicians and the entire political process (along with everything else!). This is what the Old Man meant when he said he cared not who makes the laws. He cares not who they are, or what their names or affiliations are, because (with bribery and/or blackmail) he OWNS them.

      He wasn’t lying my friend, he was speaking the absolute truth! They do that sometimes……….

      • dave jr

        OK. He didn’t care what their individual names were. But he did care who they are…those loyal to him. No one can create money from thin air “alone”. It always takes another party, for whatever their reasons, to accept it.

        • dave jr

          So you are kind of contradicting yourself Gregg. He doesn’t care who they are, so long as he OWNS them. Not everybody can be owned.

          • See comment above, it is time for each of us to examine why we continue to use and support this abomination. Not everybody can be owned, but as long as we continue to use their script, they own us don’t they?

        • Well said Dave Jr., and in the final analysis, WE are the “other party”.

      • Danny B
    • Someone is on a roll.

    • Bruce C

      An outstanding diatribe! I don’t know how to “sign in” so instead of a “thumbs up” reply that will have to do.

  • Tom kauser

    The notes in my and your pocket says ” federal reserve note” but the balance sheet FULL OF MBS and Treasury notes bonds and bills says UNITED STATES of AMERICA!
    The Fed let us print all this virtual currency so they could ring fence and live off it?
    For gold bugs this is the perfect storm! The Fed will panic and start selling down the balance sheet and instead of trading dollars for euro or yen they have to trade real dollars ( just produced) for old debts carried as assets? Selling off the fed balance sheet is like buying money back? And deflation fears has been the damper against any audit or change at the FED up to this point?

    • Bruce C

      They create the counterfeit currency (US”dollars”, FRNs) why would they care about losing them? And, the Fed didn’t let “us” print virtual currency, it’s exactly the opposite – “we” let the Fed do it by allowing it to buy US Treasury bonds that indentures US citizens and in exchange for newly created currency. In other words, “we” accepted real debt in exchange for “unreal”/inherently-worhtless currency.

  • windsor1

    A good article but it’s conclusion is incorrect. The small group of unelected men and women who control the creation of money in this world has so much power and influence that they and they alone will decide what information is released. Consider:
    – In Canada a prominent constitutional lawyer has launched a suit to force the gov’t to borrow money from the bank of Canada at zero per cent interest rather than go to big banks for loans. It is perhaps the most important case in Canadian legal history and threatens to blow the lid off treasonous behavior by elected officials. There is virtually no media coverage! Why?
    – The cognitive dissonance in the US, is the reality that America is no longer a democracy or republic or whatever, but is tightly controlled by a ruling elite. Elected officials are controlled by campaign financing and no elected official, except Ron Paul would ever look to Joe sixpack for “serious” campaign funding. Main street did not fund Obama’s campaign despite what the democrats would have you believe. It was Wall Street, and the proof lies in Holder’s comment “the bankers are too big to prosecute.” Does Boobus Americanus really believe that any elected politican represents him, or has any loyalty to the public. They work for the special interests that provides the serious money to run the campaign machinery ie. central banking interests
    – Money was designed to facilitate commerce but it has become a tool of speculation and manipulation by the elite. I took an MBA, and although we learned that there was a reserve ratio in bank lending and that the gov’t borrowed money from the fed by issuing bonds, nobody talked in depth about how all encompassing and how powerful the controllers were that held the levers of money creation.
    – Consider how ridiculous it is, that the Federal Reserve is privately held, produces all money for the US and other central banks do the same, yet none have to be accountable to the public or government, by issuing financial statements. There is an incestuous relationship between governments and central banks. Has nobody heard the expression “The Fox in charge of the hen house”. Name one other privately held corporation has the power and influence over entire nations and is not accountable to the public. Are people so naive and stupid to believe that a small group of extremely wealthy greedy men and women are going to act in the best interests of the majority of the citizens of the nation. Look at any 3rd world nation. Show me one that has a benevolent leader. Contrast the difference between the haves and have nots. This unfortunately is the human condition. We have been socially engineered to underestimate the power, influence of The Central Bankers and assume that they worked for the best interests of the collective society. ed as necessary to maintain the value of the currency and also stabilize employment. The reality is that since the formation of Federal Reserve in 1913 the currency has lost over 95% of its value and 48 million Americans are living on foodstamps and 100 miollion working age Americans cannot find employment, The same gov’t that will give you transperancy lies about real unemployment to cover up the disaster that is called the Federal Reserve.
    – Want more proof. The only business more profitable than banking is perhaps the illegal drug industry. They pay you 1% interest on a dollar deposited and lend that dollar out 10 times or more 3-5% or more. Why is no central banker on the Forbes 400 richest list. No Rockefellers, no Rothschilds, no Schiffs, Warburgs or others? These same people control the media and are afraid that if the cat was let out of the bag the public would scream for abolition of private central banking.
    – Rand Paul is not a chip of the old block. He is bought and paid for by the ruling elite. He was recently seen grovelling for support from Sheldon Addelson who carefully vetted potential leading Republican candidates. Paul knows his proposed legislation is designed to fail.
    As long as governments allow big money to control campaign financing and permit lobbying groups nothing will change. The continuing push for “Common Core Curriculum” to de-educate the population, TV propaganda, reinforcement of the concept that finance is more complicated than Space Flight, and the misguided concept that central bankers are publically minded, benevolent and are modestly well off ensures that there will be little public blowback to reform the status quo.

    • Presumably we are more optimistic than you …

    • FEEuser

      Even if they release only a little info, the Internet Reformation has become so incredibly powerful that it can supply substantial and credible information which can complete the picture to the satisfaction and needs of the public. There is nothing that the bankers can do about this.

  • Tom kauser

    It is not why when or where its HOW? How can this giant squid mass a fortune off of buying securities and holding them obviously to maturity? Its real money if the 10 year washes out to say 4%! The Fed controls both (every) end of the yield curve and waiting for the inventory of REAL SECURITIES TO PAY OUT is its HIDDEN GOAL?

  • Lyn Morris

    …don’t want transparency; want elimination in toto!!

  • Danny B
    • Demand for credit is dead, unless you’re a dead beat looking for a car loan.

  • Bill Ross

    re the title: The “best” that can be hoped for, from THEM is “the illusion of transparency”

    The REAL transparency required is: Non Existance

  • Fabian

    But… also the more the public will have an “access” to the FED, yet the more money they’ll want. As long as long you’ll have people deciding, no matter the system in place, you’ll have somme sort of corruption of the system. Currently, those asking for more transparency from the FED are in the anti FED camp. Once and if transparency is granted, and the money is shown, people will want more FED. There are no reasons for the public to behave differently with the FED than they behave with the political system. What will happen is that the FED will still make money available to its usual constituents (the big banks) and on top of that will find a way to distribute money to the masses.

    • FEEuser

      But that process is not sustainable.

      • Fabian

        You’re right about that. The difficulty is to assess the time span. I think it can go on for more time than we can imagine.

  • Even if there were a full audit of the Fed, the combination of a poorly educated public and the news suppression and outright lies practiced by the MSM, nothing will change.

    • FEEuser

      But you forget, the MSM is no longer in charge. That leaves the door open for all sorts of new and unexpected possibilities.

  • Bruce C

    I don’t know. The DB seems to think that if detailed Fed operations are disclosed it will undermine central banking credibility, but I’m not so sure about that. It depends upon the mentality of those who receive and comprehend the disclosures. I suspect that the majority of those who would understand or care about Fed minutia would object only to the superficial details but not the fundamental framework. It’s analogous to, say, learning of all the dirty secrets of the Western allopathic medical system. There may be protests in terms of procedures or testing or distribution but few would reject the entire framework of using drugs to induce the opposite effects of certain symptoms.

    “Printing money” may not be objectionable prima facie to most “auditors”, but only the amounts may be criticized. A US central bank giving money to some foreign entities may be criticized, unless it is believed to somehow be in the national interest. Setting interest rates by a few “good grey men” may be criticized but perhaps only because they are old and grey, or just too few of them, or maybe because they are too many. Et cetera.

    Hopefully I am wrong and that is not the case, but I guess I’m expressing Bloomberg’s view from a different POV. We shall see how things develop.

    Here’s hoping the bankers of the world meet untimely and uncomfortable deaths.

    • Don’t wish for others to die, Bruce.

    • I always take Bruce seriously; his comments are mostly timely and accurate with powerful insights. This one however is an exception that proves the rule, maybe. The raison d’être of the central bank proposition is first as the lender of last resort. IMHO It has fulfilled its role admirably especially through the trauma of 2007-08 when industry and commerce actually froze for this first time in history. Letters of Credit were not accepted and the shipping of essential goods had stalled. Just like in 9/1l the ruling elite panicked and over- reacted, not daring to risk the unpredictable outcome of allowing counterparties to collapse and a derivatives meltdown to occur.

      It is my contention that since 9/11 the American people have been traumatised to the point of extreme reactive behaviour and require counselling on a national scale as this was the very first ever direct attack on mainland USA notwithstanding Dec 1941. Unlike here in UK when our armageddan came at the hands of the Nazis and the time span enabled the populace to adapt to the trauma of war over a long period. In other words Brits adapted over time but neverthless still remained in shock for some time afterwards.

      We can argue the causes of 2007/8 at leisure and the subsequent losers and winners (of which there always has to be some). But in the final event, business has restarted and the world has muddled along ever since. This is not to say it was the best solution. Having read Hank Paulson’s account of the sequence of events, I was pleasantly surprised at his open and candid accounts.

      Clearly we do need a new global financial paradigm for international trade to prosper and grow which I believe will emerge from the chaos in play today and yet not without some economic pain and frightful losses of capital. But I am sure this is not enough to wish anyone an untimely death, however angry we may be with their behaviour.

  • DB: “….the cognitive dissonance that lies at the heart of modern Western civilization is:

    The creation and circulation of money-stuff is of primary importance and when a culture is built around a process that is significantly deceptive, then gradually society itself begins to rot. This is because the finest minds and most successful individuals eventually come to understand that their societies are being perverted by a false system. It is a poison that infects each part of the body-politic over time: education, the media, industry, commerce and, of course, the political process itself. As a result, the most gifted people of each generation realize that to succeed, they must lie compulsively. They must never tell the whole truth. They must temporize. In the 21st century, this is evident in what we call “directed history” – the idea that technocratic experts can manage entire cultures. The cult of the expert, as we have pointed out, is an integral part of the larger deception.

    Paper certificates providing credibility must be handed out routinely via a corrupt educational system that supports the only thing that matters: the meme that monetary officials can see into the future with enough accuracy to entrust them with the power to guide multi-trillion dollar economies. The emperor has no clothes.”

    The above repeated comments by the Daily Bell staff captures the cognitive dissonance that lies at the heart of modern Western civilization perfectly. There is nothing to be added to make it any clearer…….it’s a beautiful statement.

    As regards the continuance of the analysis by the DB in saying…..”There is no possible way to justify giving a small group of good, gray men the day-to-day power to “fix” the price and volume of money going forward based on backwards-looking financial data”.

    I would state the analysis thus ….”There is no possible way to justify giving a small group of good, gray men the day-to-day power to “fix” the VALUE and VOLUME of legal tender currency going forward based on backwards-looking financial data.” The reason is that the FED is not in charge of MONEY. It is in charge of creating “legal tender” CURRENCY. It decides the VALUE of that CURRENCY, not the PRICE of MONEY. It is impossible for the FED to fix the price of money, because money has no price.

    Furthermore, with regards to the DB comment….. “In the modern era, central banks including the Fed have consistently held rates lower than they ought to be within the current fiat environment. In turn, this creates tremendous asset bubbles that eventually collapse, causing economic carnage. People lose their jobs, their homes, their marriages and their families.”

    I would state this analysis thus…..”In the modern era, central banks including the Fed have consistently held interest rates lower than they would be in a market environment in which the interest rate is established by the willingness of savers to part with their gold savings in return for interest earnings. Instead, the lowering of interest rates, while benefitting the valuations of banks’ loan portfolios in a fiat currency environment, it increases the liquidation values for borrowers. The detriment of lowering interest rates by the FED below “free” market rates is mostly suffered by capital intensive industries. It results in the destruction of capital, causing untold bankruptcies. People lose their jobs, their homes, their marriages and their families in the process.”

  • Danny B

    What will take down the Fed is its manipulation by the Wall Street Money-Center Banks.

    http://armstrongeconomics.com/2015/03/06/warren-leads-charge-against-the-federal-reserve-wall-street-bankers-days-r-numbered/

    • Hello Danny,

      If you permit me, I will recount a little history.

      “Ironically, in 1910, Senator Aldrich met with Frank Vanderlip of National City Bank (Citibank), Henry Davison of Morgan Bank, and Paul Warburg of the Kuhn, Loeb Investment House secretly at Jekyll Island, a resort island off the coast of Georgia, to discuss and formulate banking reform, including plans for a form of central banking that would accomplish the role of J.P. Morgan played during the Panic of 1907. So Citibank (now Citigroup) has been at the center of the game from the beginning.”

      The Panic of 1907 was just another depression in a line of recessions and depressions since the end of the Civil War. Though the 1907 Panic was an extra serious economic depression, all these periodic recessions and depressions had their origin in the misuse of “idle” currency (currency which should have been held out of circulation required under RBD banking procedures).

      J.P. Morgan, the undisputed leader in banking circles at the turn of the 20th Century, arranged to save the banking system in 1907. Unlike the picture painted of J.P. Morgan as a ruthless, greedy banker only out for himself, the reality was that J.P. Morgan died not nearly as wealthy as everyone assumed. He tried to get bankers to tow the line for the good of the country. He succeeded partially, but the job proved to be as difficult as herding a bunch of cats.

      The people gathered at Jekyll Island wanted to listen to Paul Warburg who advocated the institution of “liquidity creation” in the banking system, an idea which the German central banking system had implemented. It amounted to providing “liquidity” in the banking system by selling government gold bonds in secondary markets. (IOW circumventing the RBD requirements for redeemable currency).

      At Jekyll Island, the Republican leader of the U.S. Senate, Senator Nelson Aldridge from Rhode Island was asked to explore the possibility of passing legislation to create a “central bank” under the auspices of the big New York banks with exclusive authorization to create a national currency which also would provide “liquidity”, when needed. The states would have none of such exclusive franchise.

      The battle in Congress over the legislation sought by the big NY banks raged for some time, until the power in the U.S. Senate shifted and the Democrats took over Being unable to push trough legislation favorable to the big NY banks, Senator Aldridge suggested to the NY banks that they support the Progressive Movement of the early 1900s in their demands for the ratification of the 16th and 17th Amendments.

      In the meantime, the Congress debated the franchise for the creation of a “national currency”. The Congress decided that instead of an exclusive franchise to a central bank run by the big NY banks, the franchise should be extended to twelve regional, separate, private reserve banking associations, and making them subject to oversight by a congressionally constituted Board of Directors.

      While Senator Aldridge and his allies in the U.S. Senate could no longer pass legislation after 1911, they could hold up the states’ legislative version of a national reserve banking system made up of twelve regional reserve banks until the 16th and 17th Amendments were ratified in early 1913. Subsequently, the states’ version of reserve banking legislation entitled “Federal Reserve Act” passed Congress in late 1913. It was signed into law by Woodrow Wilson on Christmas eve 1913.

      Why were the NY bankers interested in the ratification of the 16th and 17th Amendments….??? It becomes clear in hind sight. Without the Income Tax Amendment, the selling of government bonds in secondary markets would not have been possible. With the ratification of the 17th Amendment, the big bankers insured themselves against the interference of their central banking scheme by the states. Popular elections of U.S. Senators gave them the opportunity to “buy” U.S. Senators. Nothing has changed to this date.

      Following the turmoil of the Great War (WW I) in 1918, the Federal Reserve Bank of New York, one of the twelve new, regional, separate, private banking association formed under the FRA of 1913 started to inject “liquidity” into the banking system by engaging in the illegal sale of U.S. government gold bonds (all U.S. government bond at that time were “gold bonds”) in secondary markets. The FRB NY kept doing this until the late 1920s when in 1929 the bubble created by the illegal open market operations collapsed with the stock market crash.

      The American people became suspicious of the value of their Federal Reserve Notes and wanted to redeem them as promised on their face. By the early 1930s, banks were no longer able or willing to redeem. Despite his promises to the contrary, FDR nationalized the gold savings of the American people in 1933. He also prohibited Americans from holding gold in the future. This relieved the banks from facing endless law suits of fraud for failure to redeem. With the National Banking Acts of 1933 and 1935, the Congress totally changed the original provisions of the FRA of 1913 which created a system of private, regional reserve banks, but it kept the name “Federal Reserve System”, ostensibly to fool the public.

      With the NBA of 1935, the twelve regional, separate, private reserve bank associations were nationalized as regional Federal Reserve District banks, and against credit, their gold reserves were transferred to the vaults of the new federal government central bank agency, aka “The Federal Reserve” with headquarters in Washington, DC.

      So much for history…..

      I don’t think Elizabeth Warren has the slightest idea about what the modification of Section 14 of the original 1913 FRA with the NBA of 1933 did to the U.S. monetary system. Furthermore, I don’t think Senator Warren has the slightest idea about the consequences that followed from the ratification of the 17th Amendment.

      Firstly, Section 14 of the original FRA was modified to include authorization for the monetization of sovereign debt.

      Secondly, the 1935 NBA dissolved the Board of Directors as the congressional oversight body of the Federal Reserve System, in favor of a governing body for a federal government central bank, with the name of Board of Governors of the Federal Reserve, together with the establishment of a Federal Open Market Committee to set “prime” interest rates.

      Thirdly, it is the President of the United States who nominates members to the Board of Governors, but by law the nominees must come from the banking profession.

      Fourthly, it is the U.S. Senate which confirms the nominees, but thanks to the ratification of the 17th Amendment, at least 50% of the U.S. Senate, regardless of party affiliation, is beholden to the bankers. It is those bankers with their campaign contributions who see to it that at least 50% of U.S. Senators are “bought”.

      Then, I bet that Elizabeth Warren has not the slightest idea about our present monetary system. I don’t think she understands that we don’t have a monetary currency since 1971. What we have since 1971 is a monetized debt currency. IOW, all we are passing around are debt obligations. Nothing, but simple IOUs…….

      I don’t think that Senator Warren has the slightest idea that the debt currency is created through government deficit spending turned into U.S. government debt obligation, which are then sold in secondary markets to bring irredeemable currency into circulation. The U.S. government debt instruments sold in secondary markets necessitates the payment of interest by the tax payers. Unless the interest is paid promptly and not instead rolled over year after year, the interest due and not paid incurs an interest expense with exponential dimensions which will destroy the currency all together, unless that practice is stopped before a certain point. Sadly, that point has passed in 2008. Now, unless the “legal tender” protection is removed forthwith from the irredeemable Federal Reserve Note currency to allow the restoration of redeemable currency, the economic outlook for this country is down right abysmal.

      …and then again, maybe Senator Warren is knows all this, and she is devious enough to go forward with her antics to give the federal government central bank and the central bankers cover. We have seen a similar scenario in Russia in 1905 and later in 1917……

      Watch, if she gets campaign contributions from the central bankers, we’ll know what’s what…..

      • Danny B

        Ingo, I always get a welcome education when you write.
        One other observation about J. P. Morgan. He said that only character would merit credit. In essence, the banker / loan officer. is passing moral judgement. Morality has gone out of fashion in most quarters.
        Douglas MacArthur, et al, have clearly stated that moral decay of a society is invariably followed by economic decay / collapse.
        Mother Nature sits in judgement of the farmer, rancher, fisherman. GOV and the F.I.R.E. economy have no higher authority to hold them back. It must be morality and self-discipline OR no control at all.
        Adams, “Our Constitution was made only for a
        moral and religious people. It is wholly inadequate to the
        government of any other.”
        Quite simply, fraud kills trade. Martin Armstrong said FACTA may be the worst law ever enacted. He also reports that international capital flows are dying. This is seen in the Baltic index. As trust dies, commerce dies. Both Sr. Price and Antal Fekete have written about the end of international trade.

        America long ago passed cheap peak oil in the lower 48. We can get all the domestic oil that we want if we pay enough. High-price oil severely diminishes other economic activity. There is plenty of cheap oil in Alaska but, only one 4′ diameter pipeline to bring it to market. The well-depletion rate of fracking wells insures that we face an oil shortage in the future.
        There are plenty of problems with oil right now; http://www.energeticforum.com/272189-post622.html

        • There is also the “education” that claimed Morgan was at one point responsible for 30 percent of the US gross national product yet his estate when he died was considerably under US$100 million. The idea that Morgan was a moral and upright self-made man is at least questionable, to say the least. With Tesla, he apparently acted like a thug. Nothing moral about that. Ingo’s gloss represents a surface perspective on 20th century high finance. Look to the Creature From Jekyll Island to see beneath …

          • I know that you love “The Creature from Jekyll Island”, but you are misguided, if you take most of the assertions made by Mayer seriously……..

        • FEEuser

          I know we live in a world of scarce resources, but as near as I can tell, the only “shortages” worth noting are those artificial ones created by the power elite.

          On the other hand, I am hearing a lot of new things about physics and energy which lead me to believe that energy is virtually limitless.

          Nasim Harramein has calculated that ONE cubic centimeter of empty space has greater mass and density than the ENTIRE VISIBLE UNIVERSE OF CELESTIAL BODIES! That is, for all practical purposes, INFINITY. It also contains limitless energy and information. Therefore, empty space, or, the vacuum, or ether (all terms are used) is NOT really empty. The ether contains far more mass and density (though invisible) than the physical objects we see around us. The universe is mostly ether. Therefore, most of the mass, density, energy, and information, in the universe is in the ether, and the “dark matter” nonsense may be put to rest.

          Anyway, I suspect that the scientists working for the power elite know all this perfectly well and are hiding the knowledge from us. I also suspect that we could be tapping into this energy RIGHT NOW but for the obstructing and information blackout perpetrated by the power elite.

  • FEEuser

    “Giving the Fed a hard time might have a point” is mighty dangerous talk for the MSM. For a bureaucrat, it is surely fatal. The “limited modified hangout route” won’t work here. The incredible power of the Internet will see to that.

    In one sense, “bringing more transparency to the FED” is, of course, an exercise in futility. In another sense, however, the FED and the federal government which gave it its powers will, sooner or later, be stuck with having to explain the unexplainable. They are both taking a huge calculated risk in revealing ANYTHING in the way of “transparency.” Open the door of disclosure an inch, and the revelations may to turn into an uncontrollable flood. What will the people say? What will they do? Can the people remain passive forever after the credibility of FED supporters has vanished? Sooner or later, there is going to be a revolt of the masses.

    In their naïveté, the public will probably go along with the meme that if a little “transparency” is good, more is better. But the FED cannot stand more transparency. Anybody who studies the situation knows that. FED giveaways and arbitrary monetary controls cannot possibly survive full disclosure.

    Transparency might, therefore, actually be a good, if inadvertent, step in the right direction provided that FED opponents make the most of this opening for an attack by hammering away at FED duplicity and fraud, and by exposing its unforgivable crimes and depredations against innocent people.

    If officials, pundits, and journalists think that “explaining itself better” and “being more accountable for its actions” would serve as an anodyne for the FED and its faults, so be it. By all means let anti-FED critics respond by opening up with all batteries with grim determination.

    If FED officials hold back, mislead, prevaricate, stall, stonewall, temporize, or obfuscate, then the critics must respond like wolves with endless and agonizing analysis, hypothesizing, theorizing, gossiping them to death and hounding them out. Neither silence nor inaction are options. This is a battle of wills between the people and the monopolists. The people must want to win this war more than the monopolists do.

    Time will tell, but I suspect that this little seed of spontaneous order may one day grow into a mighty engine of destruction not only of the FED, but of all forms of economic interventionism by government. It will also go far in preparing people for the even more fundamental goal of eventual secession from a hopelessly and criminally destructive political system and the creation of many small anarcho-capitalist societies which will replace it.

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