The Federal Reserve System is controlled by private interests (i.e. factions in terms of the Federalist Papers), not by the government (i.e. the People).  In the 1982 case Lewis v. United States, the Ninth Circuit Federal Court of Appeals stated that the "Federal reserve banks are not federal instrumentalities for purposes of a Federal Torts Claims Act, but are independent, privately owned and locally controlled corporations."  The leadership consists of a board of 7 governors appointed by the president and confirmed by the senate for 14-year terms (12 U.S.C. § 241) with 14 regional banks. In the Constitution, only Congress had power to print money and set its value; however, Woodrow Wilson signed the Federal Reserve Act of 1913 establishing a new independent branch of power to control the printing and value of money.  A few years after, Woodrow Wilson wrote,

"I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of  credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most  completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men."

To read what presidents before Woodrow Wilson had to say about a private national currency controlling system go to The Money Masters.

The existance of the Federal Reserve System means that when the government needs extra money, it has to loan it from the Federal Reserve with interest, rather than printing the money itself.  The Federal Reserve has the power to print United States dollars, not the United States government!  This is the reason we have such a huge national deficit, which is currently around $8 trillion, meaning about $27,000 of debt per US citizen.  If the United States government did not give the power to control money to a private, independent, highly secretive, albeit slightly monitored by Congress, organization, then the government would not need to pay about 40% of the national debt (in 1998 40% of national debt was attributed to paying the Federal Reserve or other government accounts).

National Debt as of December 1998

John F. Kennedy tried to fix this problem by passing Executive Order 11110.

Executive Order 11,110
AMENDMENT OF EXECUTIVE ORDER NO. 10289

AS AMENDED, RELATING TO THE PERFORMANCE OF CERTAIN FUNCTIONS AFFECTING THE DEPARTMENT OF THE TREASURY

By virtue of the authority vested in me by section 301 of title 3 of the United States Code, it is ordered as follows:

Section 1. Executive Order No. 10289 of September 19, 1951, as amended, is hereby further amended-

1. By adding at the end of paragraph 1 thereof the following subparagraph (j):

(j) The authority vested in the President by paragraph (b) of section 43 of the Act of May 12,1933, as amended (31 U.S.C.821(b)), to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury not then held for redemption of any outstanding silver certificates, to prescribe the denomination of such silver certificates, and to coin standard silver dollars and subsidiary silver currency for their redemption

      and –
2. Byrevoking subparagraphs (b) and (c) of paragraph 2 thereof.

Sec. 2. The amendments made by this Order shall not affect any act done, or any right accruing or accrued or any suit or proceeding had or commenced in any civil or criminal cause prior to the date of this Order but all such liabilities shall continue and may be enforced as if said amendments had not been made.

John F. Kennedy
The White House,
June 4, 1963. 

It allowed the US government to print money independently of the Federal Reserve and backed it with silver (the Federal Reserve did not back their money notes with any commodity, thus they had fiat or fiduciary money), which would help repay the national debt and undermine the power of the Federal Reserve.  This reintroduced the United States Note (red seal and serial code), rather than the Federal Reserve Note (green seal and serial code).  Printing of the United States Notes began, but a few months later John F. Kennedy was assassinated and printing/circulation of the United States Notes stopped under the new leadership of Lyndon B. Johnson.  Future presidents ignored this idea for reasons unknown to me. People, such as Congressman Ron Paul, have tried working to change this, but nothing seems to have come out of it (speech to House of Representatives).

If there was no Federal Reserve, there would be no inflation. Our government would raise money solely through taxation without inflation. This would restrict the amount our government could spend, thus putting its financial policy in real-world terms. It would make it more difficult for the government to quickly spend massive amounts of money (binge spending), because it would have to just as quickly cut spending in other programs, similiarly to how normal budgets work. Why don’t people change the system? Llewellyn H. Rockwell, Jr. explains thus, "What keeps the gold standard from becoming a reality again is the love of big government and war. If we ever fall in love with freedom again, the gold standard will once more become a hot issue in public debate." To learn more from him, read Our Money Madness, which enlightened me to how much sense it makes to use gold coins (or gold-backed money) rather than fiat money.

Federal Reserve Notes are green, United States Notes are red and Silver Certificates are blue

It seems hardly anybody knows about this.  The public needs to know.  What do you think?

Abolish the Federal Reserve System

This entry was originally published at Interconnectedness by Mikhail (Misha) Lomize