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Part 9 in a multipart series examining solutions for our ailing economy, presented by Art Thompson, CEO of The John Birch Society.
 It is not our purpose to delve into the various complications of the Federal Reserve, but only to touch on the highlights and ramifications of such a system.
The American people have to decide one of two things:
1) Do they want to remain free and independent, taking responsibility for their own lives, or;
2) Allow Congress to continue to go beyond the Constitutional limitation of government and allow any agency to control and issue fiat money, and the amount of that issue.
We are currently operating under the system listed as option number 2. How we got here involves two major steps away from the economic system of individual freedom our Founding Fathers preserved for us. The first occurred during the Civil War as the Coinage Act. Then, just before World War I, the establishment of the Federal Reserve. There were other minor and supporting acts augmenting the power and scope of these two important actions along the way.
The Constitution was brought about to protect the rights of the individual and the people. In the course of protecting these rights, the Constitution stipulates what Congress and the states may do concerning money. The powers given to the Congress were short and specific: to mint gold and silver, establish the value thereof, to establish the value of foreign coin, and require the states to pay debts in gold or silver.
It was not that our Founders were unfamiliar with paper money that caused them to mention only gold and silver ― it was because they were very familiar with paper money that they only mentioned gold and silver.
One of the crucial arguments in the Constitutional Convention was the desire to keep government from issuing paper money. The colonialists had a very bad experience as a result of issuing the “Continental,” the paper money issued by the Continental Congress during the War of Independence. The paper was worthless, built more on hope than substance. It was so worthless that for nearly two hundred years a saying in America was, “It’s not worth a Continental.”
History was also at the disposal of our Founders, and history proved over and over again that paper currency or worthless metal had been used to build totalitarianism. The reason: paper money takes away from the individual his ability to be truly independent from contravening influences other than armed might. When a government issues paper money, it can easily ruin its value by printing more and more of it. The destruction of the value of the money is an insidious and thorough tax that strips the products of the labor and investment of the citizens from them, without their consent, and usually without their knowledge. It is a means of theft, and as such is conducive to totalitarianism, which itself might be adequately defined as the theft of all natural rights from the citizens.
The thievery of the state through the dilution of the value of paper money is called inflation. Throughout history, including modern times, inflation has taken a heavy toll on many civilizations and countries. The over issuance of paper, particularly if it’s not redeemable in any intrinsic metal — fiat money in other words — results in higher prices for products and services, forcing up wages, and is marked by a general devaluation of the currency. Yet most Americans do not understand this. Most citizens of the world do not understand this. Therefore, a powerful few get away with stealing from their own countrymen.
For the politician, and the totalitarian-leaning bureaucrat, the chief attraction of fiat money inflation is that it is an invisible form of taxation and confiscation of wealth. Since politicians and those in control of the money supply understand that the citizenry will resist heavy taxes, they accomplish the same thing using inflation. This includes the process of deficit spending.
Money is issued simply by rolling the presses. Different numbers are placed on the sheets indicating the amount they represent. The more that are printed, the more paper there is in relationship to goods and services. The more paper in circulation, without a corresponding rise in the level of goods and services, the more it takes to buy those goods and services — inflation. At some point, goods and services become unattainable and then unavailable because the payment is worthless. Wealth will not be traded using paper because the paper is simply that: paper.
The first issuance of paper money by the Federal government was the famous Greenback. In three years time, the Greenback lost 50 percent of its value due to over issuance, and it was backed by gold, but not enough gold. The loss of this value really means that the government robbed its citizens of 50 percent of their wealth. The Confederacy robbed 90 percent. The South was poor at the end of the war due to inflation, not defeat. The South did not recover for nearly 100 years.
It is bad enough that inflation robs the people, but it does something far worse: allowed to continue and accelerate, it ends in civil chaos and dictatorship. Again, history as well as the present situation demonstrates this fact.
From Athens to Rome, and in modern times from Argentina to Zimbabwe, inflation has killed representative government and the people become enslaved and/or the civilization collapses into a dark age.
The situation we have in America is of Congress giving the power to issue fiat paper currency to a quasi-private entity called the Federal Reserve. The only restriction is how much the people will tolerate at any given point.
The tolerance level is enhanced by contrived crises, panics if you will, at varying levels, depending on the lengths of the strides toward power the power brokers want to risk in order to grab even more control. The Civil War, the Panic of 1908, the Panic of 1929, ― spend enough time studying the intricacies of each and you find ugly manipulation behind the scenes.
The crisis of 2008 did not come as a surprise to those who watch such things. The writing was on the wall, as we pointed out in The New American magazine, years ago. Other analysts likewise saw that the radical inflation of the money supply that accelerated in the last decade would lead to terrible bout of economic turmoil. Nevertheless, now that it is underway, stopping the process is very difficult due to the widespread ignorance of the voter.
The ignorance of the voter is compounded by human nature. History has also informed us that in a democracy, rather than a republic, people will ultimately vote for those promising the greatest rewards from the government largess. The size of the citizenry taking from the government grows. The size of the citizenry supporting this process through their tax payments shrinks. This accelerates the problems of inflation via the influence of voters who refuse to accept personal responsibility.
Anyone who has really studied history knows these things – and so do those in control of the Federal Reserve. They seek to complete the process at some time in the future. Again, we recommend the book, The Creature From Jekyll Island, for background at www.ShopJBS.org.
The Fed has never been audited. The public and almost everyone in government have no clue as to who constitutes the stockholders of the Fed. If the Fed is honest and good for America, one would think that these two things would be transparent. It is a private corporation, so it should have the protections of a private corporation. The problem is that it has been given powers that makes it a quasi-government agency, without sufficient oversight other than a hearing now and then resulting in absolutely no changes.
There have been Congressmen who have looked closer at the problem of the Fed and they claim that since its onset, the Fed has been involved in sending American wealth overseas and in building up countries and persons who later became the enemies of the United States.
We cannot allow a system of fiat money to operate, let alone one held by those over whom the people do not have any direct means to monitor or control. Money is too important to the well-being of the economy, the people, and freedom in general not to go back to what our brilliant Founders gave us in the Constitution.
(AP Images)
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