The Federal Reserve isn't "federal" and it has no "reserves." Is it a public institution? No...Is it private? No again...Is it Constitutional? Absolutely not!...Who owns The Fed, and does it even matter?
The Federal Reserve isn't "federal" and it has no "reserves." Is it a public institution? No...Is it private? No again...Is it Constitutional? Absolutely not!...Who owns The Fed, and does it even matter?
The Federal Reserve isn't "federal" and it has no "reserves." Is it a public institution? No...Is it private? No again...Is it Constitutional? Absolutely not!...Who owns The Fed, and does it even matter?
Hello everybody and thank you for tuning in to the Liberty Report.
With me today is Chris Rossini as a co-host.
Chris, welcome to the program.
Great to be with you, Dr. Paul.
Very good.
We're going to talk about one of our interesting subjects and we have an audience that's always fascinated with what we can reveal about that friendly bank called the Federal Reserve.
So we'll talk about the Federal Reserve and the one question I get so often, and I do believe there's a little bit of confusion about it, and that is, who owns the Fed?
And you read on the internet different things.
Well, it's not the government.
The government has anything to do with it.
It's not owned by the government.
It's not run by the government.
It's an absolute private bank, and they have total control.
I don't see it quite that way, Chris.
I think it's more complicated because I think it's unique.
There's no other example quite like the Federal Reserve because it is created.
You can't argue that the Federal Reserve was created by anybody or anything else than the government, you know, with the Federal Reserve Act back by Congress signed into law.
And so that is there.
But the one thing I think where people get confused are is we have the bank.
There's a lot of beneficiaries from it.
But it's totally secret.
So instead of me ever using the term, well, it's private, and all we have to do is take over this private bank and we'll run it.
No, it's nothing like that.
It's not private in that sense.
It's not anywhere close being like a private business.
If it were, you know, then we'd have a little bit more control of it.
At least the authoritarians would.
You know, you have regulations and you control it.
But it's not like a private organization at all.
It's a secret organization.
And that's, I think, the biggest thing.
Now, when they set it up, what they said is we had to have something very independent and not political.
And therefore, they used that term to say that they had to have complete secrecy.
So when they talk about independence, even though it's government, it's independent, it means that it's secret.
And that's where the problem is.
And I think, Chris, what we need to get people to think about is who controls it.
That's more important than a technical ownership.
And we'll go into a little bit of detail who actually owns the stocks.
But I think the biggest challenge is who controls the purse strings.
Yes, not only who controls it, but what they actually do.
For me, it really doesn't matter if they're public, private, nonprofit.
What they do should not be done by anyone, whether it be government or private, and that's counterfeit money.
And we'll never get to the absolute truth because the whole enterprise, like you mentioned, is based on deception.
So you're not going to get to the absolute truth.
And it's really not necessary.
What we do know, as you pointed out, is government gave the Fed a monopoly over the money supply.
And at the same time, we are forced to use that money.
That we do know, and we have some control over if we don't buy into that it's necessary.
But nobody should counterfeit money.
Money should be voluntary, as it always has been in the past, and left alone to the people in the marketplace.
And the people on their own always choose either gold or silver or something like it.
Right.
And I think the important thing here, and you alluded to it, is the way it came about.
It's absolutely unconstitutional.
Yes, there's bad economic policies, it's bad morality because it's like counterfeit, but there is no authority in the Constitution.
They defied every restraint in the Constitution for establishing a central bank.
And it wasn't a new argument because, you know, Jefferson and Hamilton argued that, and yet Hamilton won and had the first national bank.
And then Jackson had to get rid of the second national bank.
And then Lincoln played games with a national bank.
The Gold Standard Debate00:08:42
But then the Federal Reserve comes in and really settled the so-called argument and introduced a bank that has survived.
The economy doesn't look like it's guaranteed to survive, but right now we still have this Federal Reserve.
It's hidden.
But I would say from the first time I got involved in politics that the contribution of many others and myself in trying to expose the Federal Reserve has been beneficial.
A lot of people want to know more about it.
The young people I've met on college campuses are very much aware of it and they understand it.
And you use the word counterfeit, and when people think of counterfeit, they know what it is and why it doesn't make any sense.
Of course, even at the beginning, they weren't supposed to counterfeit money.
They were still on a gold standard and this sort of thing.
But it was created by the Federal Reserve Act.
It was set up a Federal Reserve board which involves seven people.
And that board is approved by the Senate.
You have to have an approval.
But then there's 12 districts, and the regional Fed bank districts elect their own presidents and they're not approved by the Senate.
But the most important member of that group sits on the FOMC all the time.
The 12 regional banks rotate to have five of them serve on the FOMC and decide monetary policy.
But the New York Bank has always a position on the FOMC.
And when you think about power and control, when you think about what's in the Federal Reserve and New York and our Secretary of Treasury, and then look to see who they are, then you can find out a bit about the control.
Because once again, the technicality of ownership is minor compared to the control.
Because ownership, you can go to the internet and look it up.
Who owns the stock?
And there's a lot of banks and they'll list them and some are, you know, establishment.
And there's like 3,000.
All members have to, not all members, but many of the members have to pay an entry fee, you know, admission fee.
And then they get paid dividends.
It's one of the things where they do get special benefits and they are connected to the government because the Federal Reserve doesn't have to earn money, but they can pay the member banks a 6% commission.
They were earning 6% when even today a saver owns 1% or 2%.
So it was rigged for the banks business.
It made it easier for banks to get loans.
So it's that power that they have and the inability for the average person to know what's going on.
Quite frankly, when they announce these things, the FOMC's meeting, they're going to have an announcement in a press conference.
I think that's all just a scam.
I think even before the meeting starts, it usually starts on a Tuesday and finishes on a Wednesday.
Then there's a press conference.
I think all the rules and regulations and the plans, exactly what's going to be announced, knew it before it even started.
And I don't think those votes mean a thing.
Every once in a while you have somebody disagree, but they just go out and they talk about it.
Now, the other way there's a tremendous benefit to some people is the ones who know what the plans are and what they're going to say and what interest rates might do up and down because that helps the investor to a large degree.
So, Chris, I think people have to understand that control of the Federal Reserve is a lot different than owning it.
Ownership is technical.
They own stock.
But the stock is not stock anybody can sell.
It goes with the bank.
You know, it's this sort of is their ticket to get special deals and get their subsidies.
But it's not a stock you buy and sell, so it's not truly an ownership.
But once again, the best way for me to understand it is not to get confused with technicalities like ownership, because control means everything in the world, because that makes the difference.
Yes, and since we're talking about a deceptive organization, they're going to have to deceive the people, which they have done a great job of doing, because there's many people that if they think of the Federal Reserve, they think, oh, well, it's there to regulate the economy.
As if such a thing is even possible to regulate hundreds of millions and billions of individual decisions that happen every single second.
They do no such thing, but people believe that they do.
But like you said, they make plans and stuff, but they make plans for themselves.
They're not planning for you.
You're in charge of your life.
But people are convinced that they need government regulation, Fed regulation.
But all that happens when such a thing occurs is that small groups get to take advantage of everybody else, and that's exactly what they do.
And on the surface, though, that's how they pitch these things.
It's for the consumer.
You know, the banks and the Federal Reserve system and all these rules and regulations, it's never for the benefit to protect the big banks and, you know, and take care of those big borrowers who get this new money first.
They are the ones who are, they promote the message that the consumer have to be protected because they're bankruptcies.
And before the Federal Reserve, there were bankruptcies because they abused the gold standard.
And they abused it and they speculated and they had fraction reserve banking.
And there would be banking crisis.
And the Federal Reserve mainly was promoted by and written by the bankers.
And it was to protect the bankers.
But they can't go out to the public and get the public to go along with this legislation.
They had to go out and say, well, we'll protect you too.
We'll protect your deposits.
We'll have insurance on this.
And of course, the insurance is nothing more than a moral hazard.
It allows the consumer to be careless.
He puts his money in the bank anyplace.
And the bankers are careless.
They make loans anyplace because they will be backed up and they think they have the insurance.
So it is a mess, and it can last a long time.
And especially in a country like ours having inherited the reserve currency of the world after World War II and having a lot of gold at one time, we were able to keep this myth going on for a long time.
But what I think is happening, I think it's coming to an end.
And I think that's why we see the stock market up and down and people now thinking a lot more about central bankers around the world buying gold.
So I think this is coming to an end.
But this has been noticed, you know, that it's fragile.
There are a lot of panics and crashes.
And after the 87 stock market crash, they invented this thing called the Plunge Protection Team, you know, the Presidential Working Group on Financial Markets, because they don't like to see the markets going down sharply.
I'll bet they've been busy in the last couple weeks because the markets are going down rapidly, probably more than they like.
And they're probably trying to smooth it out because ultimately they cannot control a fiat currency.
They cannot control a marketplace.
And eventually the market rules out, just like it was the market that insisted that the gold standard, they couldn't lie about the gold standard.
For a long time, they just said, oh, yeah, we're still in a gold standard.
Just don't let the American people own the gold.
That might embarrass us because we'll have to give away all our gold.
So, yes, it would be embarrassing to them.
And that's why they had to give up.
But the markets did that.
And the markets will drive this.
And in spite of all the power they have and all the special interests, I still think about the panic.
The panic and the bubbles are still there because that's human nature.
And they would do everything possible to remove that.
And it always reminds me of what Federal Reserve Board Chairman would tell me when I was challenging them with the difficulties that we're having in financial affairs.
They said, yeah, that's right.
You're right.
This has to go up.
It has to go down.
But their argument was, just so it's orderly, you know, just so it's not too rampant, just so there's no panic and this sort of thing.
But I don't think they have control of that.
But they've had a lot of control.
They have created a lot of mischief.
And just look now, Chris, what they have financed.
And I can't believe that people should be able to defend what our deficit financing and our fiat money has created for us.
Defending Debt Bubble00:03:29
Yes, it's a total mess, but that's when new ideas are necessary.
And I'll finish, Dr. Paul, by saying we need a total separation of banking and state.
And not just banking and state, all corporations and state, but start with at the top with the Fed.
And that may look like a daunting task when you look out into the world.
How are you ever going to get to that point?
But when we look out into the world, we're looking at the results of the old ideas.
In order to get different results, we need new ideas.
That's the order of operations.
And if you even think back a couple hundred years, people lived under church and state, and they had to separate that.
What a daunting task that was, where their king was their God.
How are they going to do that?
But they did it.
New ideas came along.
America's founders were a part of that.
We're just, we now have to separate banking and corporation from the state, and the world will definitely be a better place.
Yes, very good.
And I think that the best I can do is try to reassure people that if you do truly have a free market and principles that we believe in of property rights and you have to follow up on contracts and you can't lie about money.
You're not allowed to counterfeit like the Federal Reserve.
Things can be worked out.
That doesn't mean it'll be smooth sailing for everybody.
People will make some mistakes.
But the whole thing is there'll be a lot less and they'll be isolated and there will be none of these massive trillions of dollars of bailout.
But free market banking doesn't mean that your account wouldn't be insured.
You know, right now it's insured by the government and that means it gets out of control.
Your property is insured by flood insurance too, but most of the time they never, you know, people build in the wrong places and they don't get reimbursed.
It's so misleading.
But free markets would provide insurance.
There's nothing wrong with free market insurance, but it wouldn't be the government working with the bankers to give them a rubber stamp of approval, which happens.
The banks would be inspected by their insurance company.
And the insurance company would then tend to be more reputable.
And if you got an approval from ABCD, whatever insurance company is that it's insuring the deposit, that means they go in and look at it and it might mean something.
And overall, in the history of this country, on some things, insurance companies have worked pretty well.
It's when the government gets involved like they do in medical insurance and other things that they mess things up.
But the only other thing that you would need in a free market banking system, you have to allow the market to work.
If somebody abuses it, they have to suffer the consequence of it.
But it's also an opportunity for people to look at it from a free marketplace.
Now, the one rule that has to be placed, this doesn't have to be a fancy rule.
It could be just included under no fraud, which means you can't lie about the currency value.
And if you're going to have a unit of account by the government, like our Constitution was allowed to permit it, the currency, the coinage, has to be defined.
And up until recent years, it was always a weight and measure of precious metals.
And that's the way sound money has existed for thousands of years.
Horrendous Debt Bubble00:00:38
And we've gone a good many decades now without it.
And that's why we're facing this horrendous debt bubble.
And the debt bubble will collapse because it's unpayable.
And it's a consequence of this.
So once again, I want to close by saying the control of the Federal Reserve, the principle of the system, what the Federal Reserve Act did, that's all very bad news.
But it's a lot different than just saying, oh, it's a private company and what we need to do is take it over and run it with entrepreneurs.
No, we need to get rid of it.
I want to thank everybody for tuning in today to the Liberty Report.