Graham’s note: the following is an excerpt from my latest issue ofThe Phoenix World Views Digest, my monthly newsletter devoted to dissecting how the socio-economic-political structures of the world REALLY work.
In this issue I approach the topic of fiat money, specifically the US Dollar and the myths surroundings its real value and form as a currency. To learn more about The Phoenix World Views Digest.. and how it can help you to better prepare for the coming changes in the world… Click Here Now!!!
What is money?
Most of our adult lives are devoted to making this stuff. Next to food, water, and sleep it’s the #1 concern for most human beings in the US. Nearly 80% of divorced couples cite financial difficulties as a reason for the divorce. And the American Psychological Association reports that 73% of Americans cite money as a source of significant stress.
And yet, despite being the medium for every economic transaction in our financial system, few if any individuals actually understand what money is and how it works in today’s Federal Reserve banking system.
So I ask again, what is money?
The common answer is: Dollar bills or coins.
The common answer is wrong.
The US monetary system is in fact entirely backed-by debt. Dollars are not actually assets, they are debt-backed instruments produced by the Federal Reserve. I realize this is difficult to swallow, but have a look at the Dollar bill itself.
Note the top of the bill does NOT read “US Dollar” or “official currency of the United States.” Instead it reads “Federal Reserve Note.”
So this bill is in fact, NOT produced or controlled by the US Government. . Instead, it’s a note issued by the Federal Reserve.
The confusion continues if you look around the rest of the Dollar’s front. Nowhere does it state that the bill was produced by the US Government or was generated in a Federal facility. Instead you see a black circle on the left that reads “Federal Reserve Bank of San Francisco,” indicating that this particular note entered circulation via the Federal Reserve Bank of San Francisco.
But surely this is just a round about way of saying the Dollar is the US’s currency, right? After all, the Federal Reserve is a branch of the US Government.
Wrong. The Federal Reserve is in fact a privately held organization. If you go to the Federal Reserve’s website you will see that while it IS a .gov web address (http://www.federalreserve.gov/), the site itself is for “The Board of Governors of the Federal Reserve System,” or the management of the Federal Reserve, NOT the Federal Reserve System itself.
Nowhere does this site state what the Fed really is, who owns it, or how it even operates. Instead, all you see are profiles of the various members of the Board of Governors (including current Fed Chairman Ben Bernanke) and articles detailing the data the Fed tracks and the policies it enacts.
Imagine if General Motors’ website made no mention of cars or trucks but simply focused on GM’s management team and the policies they employ at the company. THAT’S the equivalent of the Federal Reserve’s website.
Now, the Federal Reserve DOES maintain another website that focuses more on the Federal Reserve Banking System’s services, however this website is NOT a .gov site, but a .org site:http://www.frbservices.org/, meaning it has NO involvement with the US Federal Government/
Which brings me to shocking truth #1: The US Government neither owns nor controls the US Federal Reserve. At best, the US Federal Reserve is a quasi-governmental organization.
The President of the United States does choose the Chairman of the Federal Reserve’s Board of Governors. However, even this setup is a farce as the Fed presents candidates from whom the President can choose from. Moreover, the confirmation of a Fed Chairman takes place in Congress, whose members receive incentives both monetary and other from Fed lobbyists as the below quote attests:
“I was advised that rejecting [Bernanke's] nomination would cause markets to nose dive, which would hurt retirees and families saving for their future. I am not enthusiastic in my support. “ – Senator Barbara Mikulski (D- MD)
Thus, even the Government’s appointment of the Chairman of the Board of Governors of the Federal Reserve is a farce. It is at best a dramatic gesture meant to instill the notion that the Fed is somehow affiliated with or controlled by the US Federal Government.
However, in reality the Fed is a totally separate entity, a privately held organization controlled by the most powerful people on the planet. To put it plainly, the Fed is a cartel permitted to operate and control the US monetary system with the approval of the US Government.
This is why the US Dollar states “Federal Reserve Note” instead of “Currency of the United States” or “Produced by the US Government for the Citizens of the United States of America” or some such thing.
The US Government didn’t create the US Federal Reserve system, all it did was give the latter its seal of approval metaphorically (by passing the Federal Reserve act of 1913 which created the Fed as a legal entity and gave it control of the US monetary system) AND literally (by placing the US Treasury Seal on every Federal Reserve Note the Fed produces):
But how could this be? How did the US, the supposed land of the free, permit a non-Government-based cartel to take control of its monetary system? Who controls the Fed? And just how did they attain this unbelievable power to operate with the Government’s approval?
To find out the answers to these questions, consider a “trial” subscription to The Phoenix World Views Digest each month I dissect a particular element of the world economy. Already readers have learned in detail about the industrial food chain, how the energy industry is set up to guarantee higher energy prices in the next five years, why every political decision in the US is dictated by multinational corporations and more.
All in all, we’ve covered topics that affect 51% of household expenses. And we’ve offered solutions and creative ideas for dealing with these issues in your everyday lives.
To find out more about The Phoenix World Views Digest and how it can make a difference in the way you see and engage with the world…
Good Investing!
Graham Summers
PS. I forgot to mention, each subscription to The Phoenix World Views Digest comes with a 30-day trial period.
This means you can sign up for The Phoenix World Views Digest today, and I’ll give you 30 days to explore the reports. If at any point during those 30 days, you decide The Phoenix World Views Digest is not for you, simply drop me an email and I’ll issue a full refund.
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