I Was Wondering, What Exactly is The Federal Reserve #1

The Fed (Federal Reserve) was signed into creation by US President Woodrow Wilson in 1913. At the time the US was struggling to maintain a form of currency that could be widely used and recognized.

Words don't do justice in showing what it must have been like for the average American to not have a way of relying on there money to hold its value no matter where or what they wanted to buy. I invite you to close your eyes and imagine what would happen if every American tomorrow went to their bank and asked for all their money in cash, let alone gold or silver.

Figures to consider:
Woodrow Wilson
Nelson Aldrich
A. Piatt Andrew
Frank Vanderlip
Henry P. Davison
Benjamin Strong Jr
Paul Warburg

Let's not become too emotionally invested in the who, what, and when, but instead look deeper into the why. Considering the amount of effort required to be apart of the Steemit community I can assume that most of us are adults and so like adults we know that you have to spend money on all sorts of things; food, shelter, security, etc. Imagine the US government as a person like you or me. She needs food, she needs to build roads and buildings, and she needs to protect herself from the wrath of man and nature. Like you and me she probably has no clue of how to do this, but feels around in the dark until she can grab hold of something solid. Shes only human.

I want to tangent a bit because this post is going to sound like a conspiracy theory, but its not. Conspiracies happen every day. I conspire with my university to learn and with my job for a paycheck so let's not use the word so liberally. What is happening here is much more insidious. So I ask you, as you continue reading, let go any attachment you may feel towards the actors involved. Don't be outraged, be encouraged.

England first thought of a form of centralized banking when attempting to fund her causes during the Nine Years' War. The English Navy had been decimated and King Louis XIV's credit score wasn't too hot. A king of a great empire, out of money and with his citizens starting to entertain the thought of revolt from the years of poverty and death. Whats a King to do but exercise his power? Thus the Bank of England is formed to print money and loan it to the crown, at interest.

His Majesty said, "let there be debt" and there was.

The Bank of England LOANED money to the king, the state. Sure the King gave the Bank that power and so common thought is he how giveth can taketh awayeth, but imagine what it would look like if a king were to wipe out his debt whenever it served him. Debt is symbolic, it is a promise. Sure you could take back a promise, but with governments, particularly democracies, word is bond less your list of enemies grow and the trust of the people be lost.

Enter unto the stage:
William Paterson
Robert Morris
Alexander Hamilton

It is like all great nations of past and present to struggle with ideas of liberty and prosperity, let us not think the terms are mutually exclusive. The Dictator's Handbook by Bruce Bueno de Mesquita considers why nations rule the way they do. We would all like to think of our governments as benevolent servants of the people, and to an extent they are, but service to the people only goes so far as it is required. There are millions of people to hear, but they all need not be served. A quarter to the street beggar, A dollar to his patron. Ten dollars to the employer of men and one million to the bank that payed for the venture. Lets not fool ourselves by thinking this is some how wrong or immoral.

When buying gifts for your children or younger family members, have you ever spent more on the oldest? Timmy is one so that red fire truck will be all his heart could care for, but give his nine year old sister Samantha a fire truck and it had better transform into an intergalactic crime fighting robot or you'll never hear the end of it. She's only human.

Sorry. Sorry. My thoughts tend to wander, but its necessary. You came here to take a peek into my head, but you can not see the world as I do until you see the world as I do. Suspend judgment.

By 1781 the United States is struggling to pay for her newly acquired home because her ex, England still isn't over their divorce. To fund the fights Robert Morris, then Superintendent of Finance makes a suggestion to Congress to make their own Bank of Englan- I mean North America. Just like that, America found herself owing $1,200,000 to a private institution. Luckily, after time of peace, the BNA is downgraded from a national central bank to a private bank.

But an idea was born... Men love their ideas.

"A national debt, if its is not excessive, will be to us a national blessing...
It will be a powerful cement of our Union. It will also create a necessity for
keeping up taxation to a degree which, without being oppressive, will be a spur
to industry."
-Alexander Hamilton

I have to say I agree, that is a great way to keep the hamster running on the wheel. Keep running, keep working, because if you stop or slow down, we are all screwed. Thus the First Bank of the United States is charted in 1791 with the same powers as both the Bank of North America and Bank of England; a privately owned bank that can print and loan money to America. More similarities can be found in that the director of the BNA, Thomas Willing, also finds himself director of this new institution, the First Bank of North America. Along with good ol' Hamilton. By 1811 the charter's renewal is up for vote, but Hamilton is dead and the lawmakers can't find a use for a national bank in times of peace, so again just as it came, it went.

Until 1816 when more fights with her ex lead America (specifically President Madison) to create the Second Bank of the United States. Don't be shocked, "first" implies that there will be a second. Blah blah blah, war war war, debt debt debt. Luckily Jackson is elected President and after some time, public, support and his leadership, America found herself debt free for the first time since her conception. So in 1836, the Second Bank falls.

During the 20th century most of America's wealth is owned by:
The Astors- Real Estate
The Carnegies & Schwabs- Steel
The Harimans, Stanfords, & Vanderbilts- Railroads
The Mellons & Rockefellers- Oil

There is a saying, "Power corrupts; absolute power corrupts absolutely." Let me clear by my definition of corruption. Corruption is not being bought off by someone with a lot of money or owing an in-payable debt. Corruption is the divergence of intent. My intent of getting a bachelors was corrupted by my interest in girls. While that was a mistake for me in the long run, because of the affects it had on my personal life, it was seen to me as unremarkable if not
exceptional at the time. I hope then you could excuse private men, with private interest, to do that which most benefits them. Consolidate their power and wealth. Those who hold power are not not necessarily more intelligent or benevolent than you or I. Such traits are formed by upbringing and refinement of character, not by the ballot box or Senate approval.

Like clockwork financial crisis and uncertainty prompts the creation of The Fed in 1913 or what I would like to call The Third Bank of the Untied States. Why it came into existence, just like the other, is a matter of public knowledge and so I won't list the legion of names and interest that brought it to be. These men are the same, albeit less noble, men that created all the other banks. The faces have changed, the names have changed, but the people, people often find themselves in the mirrors of the men before them. Officer, Your Honor, Senator, Madam Secretary, Mr. President.

"Now now", I hear you complain, "You haven't told me anything about what the Federal reserve is or how it works". To that I would reply "I have." The Fed, just like the Bank of England, the Bank of North America, the First Bank of the United States, the Second Bank of the United States, and every other centralized bank of every country on the planet has come into existence for the same reasons, to lend money to its host country. When the state needs money, the bank prints the money. Indeed this is how every bank works, if I want to secure a small lone of a million dollars, my bank will type that number on its super-secure high-speed computer and write me a check. If the bank doesn't have that money it write an IOU to the Fed and the Fed gives my bank the money. The flaw comes from the Fed not having the money to give to my bank. So cleverly the Fed "gives" the money, but also tells the bank that they owe $1,000,000 + interest. Boom! Now the Fed can technically afford to lend my bank money while making a profit.

Beware dear reader of anything or anyone who has to describe a process by use of the word "technically". The inclusion of "technically" means the exclusion of "practically" and so we find ourselves in a system that collapses over and over due to inflation, recession, and eventually depression. Long gone are the days where a bottle of Coke would cost 10 cents. All this time I thought it was because Coke was giving all proceeds to rescue polar bears stuck on drifting chunks of ice. Go figure.

The benefit of this system comes from the fact that The Fed is composed largely by the top national banks with the vested interest that should we face an economic collapse, the Fed will bail out those banks and the system continues.

To not tick off the powers that be, lets say my bank is called Capital Three.
Capital Three loans me 1 million dollars, Capital Three then ask it's representative at the Fed to loan them 1 million dollars, and should that loan some how send the entire system into collapse the Fed will then give Capital Three the 1 million it loaned me + the interest. Scale this with other national banks doing the exact same thing to over a 100 million people and you end up with a system that technically works.

This is not a bug, it is a feature. As a result we find ourselves broke and breaking. At the time of this writing it is estimated that the US debt will be over $21,000,000,000,000 by the end of fiscal 2018. Thats a big number and if you went to public school like me then you probably don't understand exactly what that looks like. I'll put it in a way that our consumer minds can readily parse.

This is a Ferrari 812 Superfast, as the name implies, this car is super fast and can be bought for the small sum of $315,000. If the US government was a bit better at managing its money we could have 66,666,666 Ferraris. If you've never seen more than $10,000 in your life aside from loans you've acquired to pay for school, rent, and utilities then I'll break it down even further.

This is the iPhone 10(NOT X IT'S A ROMAN NUMERAL) by Apple, as the name implies, it is an intelligent phone that can show you the nearest place to buy apples. It cost $1,149. If the US government was a bit better at managing its money we could have 18,276,762,402 of them in the hands of the mere 7 billion men, women, and children in the world let alone the 323 million in the United States.

This is why you see the rise of Cryptocurrencies. People like you, like me, are tired of being leveraged. We now see the chance to decentralize money and banking to the block chain. Rather this is a good fix or not I'm not sure, but I have more faith in you, the man or woman behind the screen, than I do in the systems already in place. The American Dollar is king in every country on the planet so imagine what happens when it fails. Don't fool yourself, it will fail. Rather you're from Saudi Arabia, Poland, or the States is non of my concern, my concern is what we share in common, what touches both your and my pocket and affects our lives intimately. Money.

Resources:

https://www.federalreserve.gov/
The creature from Jekyll island, G. Edward Griffin
The Federal Reserve Act, 1913
and of course, Google.

But still, I wonder.
-Sapian