Debunking Myths about the Federal Reserve

I've found many uninformed sensationalist posts about the Federal Reserve on ATS. Most of them are more than a few months old, so it would be improper to respond to them according to ABOUT ATS: All about repeat topics and what to do about them.

I'll list 10 in-depth analyses by Edward Flaherty, and their titles give a flavour for some of the irresponsible, uninformed conspiracy theories floating around.

Myth #1: The Federal Reserve Act of 1913 was crafted by Wall Street bankers and a few senators in a secret meeting.

Myth #2: The Federal Reserve Act never actually passed Congress. The Senate voted on the bill without a quorum, so the Act is null and void.

Myth #3: The Federal Reserve Act and paper money are unconstitutional. Gold and silver coins are the only constitutional forms of money.

Myth #4: The Federal Reserve is a privately owned bank out to make a profit at the taxpayers' expense.

Myth #5. The Federal Reserve is owned and controlled by foreigners.

Myth #6: The Federal Reserve has never been audited.

Myth #7: The Federal Reserve charges interest on the currency we use.

Myth #8: If it were not for the Federal Reserve charging the government interest, the budget would be balanced and we would have no national debt.

Myth #9: President Kennedy was assassinated because he tried to usurp the Federal Reserve's power. Executive Order 11,110 proves it.

Myth #10. The Legendary Tirade of Louis T. McFadden


"The twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation's central banking system, are organized much like private corporations--possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year."
www.federalreserve.gov...

So the "owners" can not pressure the Fed by:
-threatening to change the Board (appointments are made by the President and confirmed by the Senate)
-threatening to sell shares and attack the share price (shares can't be sold, so price is fixed or rather doesn't exist)
-threatening to sell shares and affect the company's ability to raise capital (the Fed needs not raise capital)

In other words, unlike a normal company, the Fed can not be pressured by its shareholders. The ownership of shares is no more than a ceremonial relic.

The Board sets policies and and manages the money supply. The Board is totally insulated from private sector banks within the Fed system.

The Regional Banks (again not the private sector banks), on the other hand, provide the services according to Fed policy, and regulate financial institutions. These are the banks that have issued shares to the private sector banks. As outlined in my previous post these shares did not grant with them any control over the Fed. The only control the private sector banks had over the Fed was at the instant of its creation, because it was created with their assistance. One could argue that private sector banks control the Fed since they execute its policies, but one would be wrong. The actions of the Regional Reserve Banks are supervised by the Board.

Another sensationalist, melodramatic exclamation is that in modern economies money is created "out of thin air" and that that is somehow a bad thing. I really wish people who pushed that argument would read things like this first: What Is Money?. Highlights:

If we think about this relationship between money and gold, we can gain some insight into how money gains its value: like the beaver pelts and dried corn, gold is valuable purely because people want it. It is not necessarily useful--after all, you can't eat it, and it won't keep you warm at night, but the majority of people think it is beautiful, and they know others think it is beautiful. Gold is something you can safely believe is valuable. Before 1971, gold therefore served as a physical token of what is valuable based on people's perception.

Fiat money was introduced because gold is a scarce resource and economies growing quickly couldn't always mine enough gold to back their money requirement. For a booming economy, the need for gold to give money value is extremely inefficient, especially when, as we already established, value is really created through people's faith and perception.

Previous ATS stories on the Federal Reserve:

Where's Bush Going To Get The Money ?
The Federal Reserve's greatest nightmare
Interesting facts about the federal reserve and the secret police
The Federal Reserve is NOT part of the United States Government
American currency enslaving citizens--The Federal Reserve

Nice research. Thanks for your time! ;p

This is some kind of joke, right? I'm not laughing.

Not only do all of these sources come from the same site, they all come from the same person. A more elaborate debunking attempt should at least have a variety of different perspectives and sources. Furthermore, this PRA site is biased against the "right" side of the political spectrum, and this is significant because as an organization that is based primarily on "political analysis", it should place all sides of the political spectrum under its microscope. Another thing that discredits this farce of an organization is that it does not have any neutrality whatsoever, even though that's how it tries to sell itself. It won't even admit who funds it, which is essential information for any kind of credible political source of info. Also, an organization like that should know, in fact probably does know, that at the highest levels, there are no such things as left or right wings in politics, nor are there any such things as liberal and conservative when making comparisons between political opponents. I could go on but I don't feel like wasting any more finite time on this. If you want me to do so however...

A strange 'coincidence' is that the PRA's, the source you used, phone number begins with 666. This probably means nothing, or it could mean something. I can't really say for sure. It's also nothing concrete in terms of saying "this info is invalid", that much I'll admit. It is intriguing, nonetheless.

I'll say this again, and I think others would also appreciate it if you heed my friendly warning: be careful when attacking the integrity and directly insulting the quality of what others have posted here in good faith. I promise you that I am saying this out of kindness to you so that you don't find yourself in a position you would not want to be. Nobody (as far as I know) has insulted your posts like you have done to others, so this kind of behavior is unwarranted but is typical of those seeking to purposely discredit people who try to turn a light to cockroaches.

Well hello again, AO! After making several misleading statements in our last discussion, you're back. Please don't chastise me for the tone of this thread, because

• you set the tone of our last discussion, as any observer can leaf back and confirm
• I'm being generous -- hoaxes have known to be shutdown on this message board before.

Do you have any arguments with the content of the material I submitted, or would you rather dwell on the numbers '666' being in the PRA's phone number

who try to turn a light to cockroaches.

As is observed once again, my tone is very mild compared to the rhetoric of those who feel free to attack the reputation of the Fed, thinking that they will be spared of the cold light of reason. Guess again.

As for the ten sources being from one site: consider them one source -- they're just a series of the same thread. And as for their bias, every source is biased. Can you refute what they have to say? They are not in any event extremely biased, and they do not rely on rhetoric to present their case -- they lay it out in cold logic that someone of any ideological persuasion can follow.

Also, an organization like that should know, in fact probably does know, that at the highest levels, there are no such things as left or right wings in politics, nor are there any such things as liberal and conservative when making comparisons between political opponents.

Your first two "points" are the same point repeated. Your third point, quoted just above, I can not seem to fit into the discussion in any way. Perhaps you'd care to enlighten us.

So, are the sources that discredit the Federal Reserve conspiracy myths biased? Can I only find one source, or am I preferring to keep my arguments concise?

Let's see...

www.totse.com...

www.politicalhobbyist.com...

Added: if you read Flaherty's papers, you'll notice that his sources are listed at the end of each.
[edit on 3-7-2004 by HeirToBokassa]

[edit on 3-7-2004 by HeirToBokassa]

[I set the tone of aggression?! I only responded to your manner of blatantly offending my posts. If you'll remember correctly, you were the person to question my simple statement that started this whole thing in that thread. I didn't come out and say "Two simple words: Federal Reserve. Oh yeah, and anyone who disagrees with me is a jerk." now, did I? No. You fired the first salvos at me with the first quote I list from you below. Even so, my retaliation pales in comparison to your attempts at disparagement. And you continue to insult me.

You don't heed my advice, despite my willingness to assist you. You continue to attack only the weaker points of my statements, and I know for sure because I stuck the "666" thing in there as bait to lure your assault which, sure enough, did manifest. And I caught you: Hook, line, and sinker. You are still demonstrating an unwillingness to read what I have to say, and this is fine, but only serves to weaken your position even further. You are still construing misconceptions from what I said, further demonstrating that you are not clearly reading what I am saying. You are even going the extra mile by taking my own statements out of context and modifying them towards your own advantage. These are not the tactics of someone who wants to bring information forward or contest possibly invalid examples of such info; these are usually the tactics of someone who wants to demoralize or incapacitate another. To shut them up, to put it shortly. Fortunately, such tactics do not work on me now nor will they have any kind of effectiveness in the future.

Even worse is how you refuse to respond to all of my points like I have responded to your counterpoints. Instead, you attack my ability as a writer and as a contributor. As I said before, you take statements of mine out of context and respond to them as if they were just random sentences. That's what sensationalism is based on and what is called dirty journalism. You even u2u me to be sure that I come out and respond to you and play your game. And that is what this is: a game. How is this a game? Simple: Virtually every other paragraph of yours features some kind of attack or devaluing statement. You are clearly trying to make this personal, which is something I refuse to commit to in a situation like this. Here are quotes from you that exemplify this over and over again:

Originally posted by HeirToBokassa
-Can you explain how there is any substance behind thatsensationalist and utterly false statement?

quote: Originally posted by AlnilamOmega
I hope this helped you out.

quote:Originally posted by HeirToBokassa
-LMAO. Indeed, it made my day

-Nope. I suggest you educate yourself on how the economy works before you make more irresponsible, false statements.

-Because anything on the internet is right? (I mean those craptacular sources you have...)

-And despite your apparent conciliatory tone you have yet to learn not to make false uneducated statements

-After losing all threads of the argument, you resort to posting a deluge of text. Note that I refrain from calling it information. Text becomes information through interpretation. But if the only way the text you provide can be interpreted as a cohesive or relevant argument is thorugh reliance on half-truths and falsities, then it is simply text, or at best misinformation.

-I am not defending the IRS, nor have I confused the Treasuries, so if you were considerate and observed the waste of space and readers' time you could have left that out.

-After making several misleading statements in our last discussion, you're back.

-I'm being generous -- hoaxes have known to be shutdown on this message board before.

Think what you will, but I am not wasting any more time with this. You can gloat victory all you want for all I care, but I just am sick of your targeting me and your instigations. You go on to demonstrate this by a few denials of yours as well as some light mockery here and there. There is more than enough information out there on just how rotten the Federal Reserve is, and I shared it in that thread you kindly linked. How you want to perceive that information is up to you, just as how I want to perceive that information is up to me. Thank you, however, for providing your information that goes against mine. I do appreciate that as that is how I learn the most. I also appreciate how you have toned down your aggressive approach, at least somewhat, in this thread.

To answer you question, however,

Originally posted by HeirToBokassa
Your first two "points" are the same point repeated. Your third point, quoted just above, I can not seem to fit into the discussion in any way. Perhaps you'd care to enlighten us.

Gladly, but, please at least consider this! It fits the discussion because the globalist elite are all a part of the same functions. What I mean is that they are pretty much working together, and span across all kinds of different polarizations in terms of political preference. An example of this is how a certain US president is elected to office, and just might happen to be a democrat or a republican. Several officials the president appoints happen to members of think tanks and other political organizations, such as Council on Foreign Relations and Tri Lateral Commission. Take for example when Jimmy Carter was elected. He had members of CFR and TLC in his cabinet and elsewhere. Then Reagan, a republican, was elected. Also had members of CFR and TLC in his administration. Nearly a decade later, Clinton was elected... and take a wild guess as to what kind of organizations his staff was a part of? You can, and probably will, dispute this by saying "well, just because they are part of the same org's doesn't mean they are all automatically in league with each other." However, you so easily cannot dispute how Hitler and Stalin were supposedly on the opposite sides of the political spectrum. Sure, Hitler is thought to be a right-wing authoritarian... but guess what, Stalin is thought to be a left-wing authoritarian. Hitler was into concentration camps, banning of guns, total control over government, and expansion. Stalin was into concentration camps (goulags), banning of guns, total control over government, and expansion. That's what I meant by no "left or right" at the highest levels of government.

Originally posted by AlnilamOmega
If you'll remember correctly, you were the person to question my simple statement that started this whole thing in that thread.

Yes, I dared to question your "simple statement" that you yourself refused to substantiate. If you simply substantiated it that would be over, but instead you chose smoke screens via pages of propaganda from conspiracy websites, offering little of your own commentary. Interestingly, regarding your original statement, you later said that you forget where you heard it...

because I stuck the "666" thing in there as bait to lure your assault which, sure enough, did manifest. And I caught you: Hook, line, and sinker.

You're insulting the intelligence of any impartial bystander if you suggest that by you putting more sensationalist, bogus comments in your posts, and my responding to them, I am somehow engaging in underhanded tactics. I am being completely forthright: when you make dubious statements I will criticize them. Is that an underhanded tactic???

You are even going the extra mile by taking my own statements out of context and modifying them towards your own advantage.

You can prevent this by not making inconsistent, contradictory statements. If you do, and if I point that out, how does that reflect badly on me???

Even worse is how you refuse to respond to all of my points like I have responded to your counterpoints.

Have you responded to any of the content I have posted yet, or have you simply made snide remarks on the my style of writing, which again as any impartial reader can confirm is much more concerned with substance, rather than emotion, than your own.

Each of my statements you quoted was in response to one of your own.

First -> "Making money out of thin air and charging you over 100% interest over it since 1913!"
You have yet to substantiate this.

Second, Third, Fourth -> You posted quotes from sources that did not get even the rudimentary details of how the economic system works correct before venturing off into conspiracy space. If you continue to do this you can expect more of the same. Again, your abrasive post set the tone of what was to follow.

Five -> What did you expect? See above.

Six -> Exactly what it says.

Seven -> You have yet to apologize for flooding the board with text when links would have sufficed (I had to page down six times to see how long it was)

Eight -> See seven. You chose to post quotes about things not related at all to the discussion, without offering your own commentary. That was wasting space and wasting time, exactly as I said. If you do that in the future I will point it out as well.

Nine -> You have yet to answer the content of my rebuttals. You make misleading statements and then abandon them in favour of personal attacks when you see that I will not stay silent about them.

Ten -> See Aussie Bloke

There is more than enough information out there on just how rotten the Federal Reserve is

There's a difference between information and misinformation. When the sources you quote get even the simplest details wrong (and these details are not even related to the supposed consipiracy), and I point them out, and you neglect to answer, then really...

And your last paragraph, again, I neither confirm nor dispute, because it has nothing to do with the discussion about the Fed. The Fed, in fact, is removed from directly elected government for exactly the issue that you bring up here -- political interference can not be trusted. Same as judges in the court.

Why do you continue to post tons of text that has nothing to do with the issue? Why are you afraid of addressing the content of the opposing views? I addressed the content of your sources.