FORT FAIRFIELD JOURNAL

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THE FEDERAL RESERVE ISN’T “FEDERAL”

AND IT HAS NO “RESERVES”

By: David Deschesne

Fort Fairfield Journal, April 23, 2008, p. 3

Excerpted from a portion of Deschesne’s future book; House Joint Resolution 192: A Critical Analysis and Commentary

Formed in 1913, the Federal Reserve is a cabal of private banking institutions operating under quasi-government authority. That is, the President selects with the advice and consent of the Senate, the Chairman of the Federal Reserve board, but the board and individual member banks functions independently of the U.S. Congress, is not required to report to Congress and its meetings and financial statements are secret.¹

[In the 1830’s, Senator Thomas H. Benton warned] that the power of the central bank was that of the power of the purse and would lead to the ultimate control of political power and is confirmed in the function of the Federal Reserve.

Since the Federal Reserve is a private banking institution, not regulated by Congress, it gets to choose to contract or not contract with the government at will. Since the government is dependent upon the Federal Reserve’s willingness to negotiate contracts with them, that makes the Federal Reserve the final arbiter of political power.

For example, according to section 43 of the National Economic Emergency Act of May 12, 1933²The President is authorized in his discretion to direct the Secretary of the Treasury to enter into agreements with the several Federal Reserve Banks and with the Federal Reserve Board whereby the Federal Reserve Banks may either purchase or offer to sell obligations of the U.S. Government.³

The Federal Reserve Board is free to choose whether or not it will purchase or market said obligations of the U.S. Government, since the President is authorized to direct the Secretary of the Treasury to issue United States Notes to pay maturing obligations of the United States, should the Federal Reserve choose not to provide that money.⁴

Since the Federal Reserve Board had the power to choose whether or not to either purchase U.S. securities, or market them for sale, the U.S. Government was operating solely at the pleasure of the Board and its member banks. The Federal Reserve occupies a position of power above and beyond the elected representatives, or even the President, even to the point of approving which military expenditures it would fund and which it would not.

Pursuant to the provisions of the Defense Production Act of 1950 and Executive Order 10480 of August 14, 1953, as amended, the (Federal Reserve) board prescribes regulations under which the Federal Reserve banks act as fiscal agents of certain government departments and agencies in guaranteeing loans made by banks and other private financing institutions to finance contracts for the procurement of materials or services which the guaranteeing agencies consider necessary for the national defense.⁵

It seems that it’s the “guaranteeing agencies” of the Federal Reserve who determine what materials or services are “necessary for the national defense,” not Congress or the President.

As for its “reserves,” the Federal Reserve has none. What it considers “reserves” are merely government debt and Federal Reserve Notes from member banks (who were forced to become members in 1980). All so-called “reserves” are nothing more than promissory note IOU’s pledging payment in still more promissory note IOU’s. There is no real wealth at the Federal Reserve, only debt notes that they consider as “money.”

Notes

1. Federal Reserve Act. H.R. 7837, December 23, 1913, Public No. 43 Sixty-third Congress, Session II, Ch. 6

2. “An Act to relieve the existing national economic emergency by increasing agricultural purchasing power, to raise revenue for extraordinary expenses incurred by reason of such emergency, to provide emergency relief with respect to agricultural indebtedness, to provide for the orderly liquidation of joint-stock banks, and for other purposes,” Approved May 12, 1933, cited by Mr. Steagall, from the Committee on Banking and Currency, 73d Congress, Report No. 69

3. op cit. §43 (a)

4. op cit. §43 (b) et seq.