Joe Meglen: About the Fed


Alice Rivlin, a former vice chairwoman of the Federal Reserve, packed the house at the Seminars at Steamboat forum Aug. 21 with her topic, "The Future of Capitalism." I had no false hopes that a Keynesian big-government insider would have suddenly had an epiphany and embrace free-market capitalism.

The idea that capitalism is responsible for the economic crisis we now suffer from is completely without merit. Free-market capitalism requires sound money and a minimum of government interference. We haven't had sound money since the Federal Reserve was created in 1913, and we have had growing government intervention in the economy since the last attack on capitalism - FDR's New Deal. Mrs. Rivlin did concede that government policy may have played a role in our current crisis, but her version was a lack of regulation.

Mrs. Rivlin cited the myth taught in government schools that the Great Depression was caused by stock market speculation. Absent was the part about where the credit explosion came from that fueled the speculation - bad judgment and fraud. Like today's "Great Recession," the Fed created the roaring '20s bubble by increasing credit at below-market interest rates, geometrically expanding the money supply through the Ponzi scheme called fractional banking.

It is not by accident that our socialized schools do not teach our children about money, the real story behind the Fed, the inflation it creates and the devastating effect it has on the citizens. It is from the Fed's manipulation of our fiat money system that politicians and the politically connected derive their power

It is imperative that the American people understand money and the Fed if they are to have any hope of restoring their freedom. The Federal Reserve is not federal, and it does not have reserves. The Fed is a cartel of private bankers who have been granted the monopoly to create money out of thin air by a corrupt government. Having a monopoly to create money out of thin air is a good business to be in. The Fed was spawned after private banking interests paid for Woodrow Wilson's campaign. Upon taking office, Wilson signed the Federal Reserve bill, delegating Congress' duty to coin and regulate the value of currency to a private banking group. Constitutional sound money restricts the growth of government. An unconstitutional fiat money system facilitates the unlimited growth of government. This is done by debasing the currency, secretly confiscating the wealth of the people through the insidious inflation tax. For generations, our socialized schools cite the mantra that the Fed was created to stabilize the economy. Real history proves that the Fed has utterly failed to accomplish its stated goals. The Fed is responsible for the crashes of 1921 and 1929, followed by the Great Depression of 1929-39, the crashes of '53, '57, '69, '75, '81, Black Monday in '87, the bubble and collapse, and now the Great Recession (if not Greater Depression). It is the Fed that has facilitated the growth of a leviathan government and the corporatism that has bankrupted our country.

Thomas Jefferson said, : "If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks : will deprive the people of all property until their children wake up homeless on the continent their fathers conquered. : The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

A good start is to call Rep. John Salazar and insist that he co-sponsor and push to pass bill HR-1207, Audit the Fed, as well as calling Sens. Udall and Bennet and insist that they both co-sponsor the Senate version of the bill, S-604.

Joe Meglen

Steamboat Springs


StopTheBrutalChemtrails 7 years, 8 months ago

Congressman John Salazar's Offices

Washington, DC 326 CannonHOB Washington, DC 20515 202-225-4761 202-226-9669 (fax)

Grand Junction, Colorado

225 North 5th Street, STE 702 Grand Junction, CO 81501 970-245-7107 970- 245-2194 (fax)


Joe Meglen 7 years, 8 months ago

Every American should watch this outstanding video about the creation of and operation of the Federal Reserve:

Contact information for:

Congressman John Salazar: 970 245-7107

Senator Mark Udall: 970 245-9553

Senator Mike Bennet: 970 241-6631


freerider 7 years, 8 months ago

Great article ......time to take our country back !!!!!


carlyle 7 years, 7 months ago

I took Milton Friedman's "Money and Banking" course at the UofC in graduate school. I'm personal friends with two heads of regional Fed banks. I've also read Griffin's book and have a copy of it. I've shifted to the Austrian side of the debate on the efficacy of central banks. If central banks made no mistakes they'd be wonderful. But when they make mistakes, like happened during the Depression, or what happened prior to the meltdown in the financial service sector, the consequences of the mistakes are so dire I think we'd have been better off without central banking. But you have to remember that government - the Fed, Treasury, IMF, World Bank, Commerce, AID, SEC, CFTC, BEA, BLS, the list is a long one - is the major employer of PhD economists. You don't want to put yourself out of a job.


freerider 7 years, 8 months ago

Interesting how we Americans keep repeating mistakes. The money meltdown spurred by bad credit and corporatism , completely engineered by the FED , also Iraq and Afganistan same as Vietnam spurred by the fear mongering war machine....geeez....the thing that kills me is the tolerance that Americans have for this. Ignorance and apathy at it's finest , just like our government wants it's citizens , completely brainwashed and stupid , then if you say anything your considered to be un-American or a traitor...


seeuski 7 years, 7 months ago

Exactly like if I say something about a Communist in the Whitehouse cabinet.

And freerider, it was spurred by all the terror attacks including 9/11. That definitely caused fear and I am sure you were one who was scared too. We all were.


Joe Meglen 7 years, 7 months ago

Another excellent source of information on the greatest fraud ever perpetrated on the American people, "The Creature from Jekyll Island" by G. Edward Griffin A Second Look at the Federal Reserve. It may sound like a boring subject, but it is a difficult book to put down. Meticulously researched and historically accurate, reading it will forever reshape your world view.


Anthony Cyrnak 7 years, 7 months ago

I enjoyed reading this article and the comments it provoked, because, collectively, they demonstrate once again the extraordinary degree of ignorance and paranoia that most Americans have regarding the Federal Reserve System and the role it plays in our economy. Most of Mr. Meglen's assertions about the Fed ought to be hilarious to any serious student of U.S. financial history and the world's current financial system--hilarious, were it not for the fact that so many Americans seem ready to believe the type of conspiracy theory rubbish that makes up most of Mr. Meglen's statements.

Any college student who ever took econ 101 (even those sleeping at the back of the classroom at CMC, where I once taught econ) would know that most of your statements are misleading or flat-out incorrect. I actually laughed out loud to myself when I read several of them. You must be reading some pretty strange stuff to have developed so many wrong ideas about how the Fed and the rest of the financial world works. Surprisingly, you were right or near-right on a few statements (e.g., that the Fed played an important role in perpetuating the Great Depression), so your article is not totally idiotic. Most of the rest of your statements, however, are untrue or very misleading at best (e.g., that "the Fed is neither federal nor has reserves"--trust me on this one; I was a senior economist at the Fed in Washington, D.C. and worked there 31 years--the Federal Reserve System is federal in structure and does hold bank reserves).

It's too bad that Mr. Meglen holds such ignorant and negative views about the Fed; worse yet that he proselytizes in this manner. Oh sure, the Fed isn't perfect and has not always hit the mark in terms of promoting economic growth, full employment, and price stability (some of its many legal mandates). But it is also not even remotely the secretive, conspiratorial institution that Meglen makes it out to be.

People who experience discomfort or loss when complex or incomprehensible problems befall them often look for (and invent) simple-minded explanations (usually incorrect) and bogeymen on which to lay blame. I would urge Mr. Meglen and the other commenters on his piece to read some serious, more academic accounts of U.S. economic history and the development of the Federal Reserve System. Conspiracy theories, while lots of fun, usually take a person down the wrong road to understanding.


Anthony Cyrnak 7 years, 7 months ago

Carlyle: your last point first--I've long since retired from the Fed, but you make a good point regarding the federal government as the employer of last resort for Ph.D. economists! We used to get a good laugh over that one ourselves!

I think you are wrong in blaming, somehow, the Federal Reserve for our recent economic woes (In fact, I like to think that Bernanke's Fed prevented a true meltdown.). Greenspan may have kept interest rates too low for too long (he was a political animal, you know; everyone in D.C. is), but there is plenty of blame to spread around on other players in both the public and private sectors when considering our recent economic troubles.

Yes, central bankers make mistakes, and sometimes those mistakes are costly. Other times, central bankers get it right and everybody wins. Have you an alternative to central banking? Friedman, as you know, was proven wrong in the end, and strict monetarism has largely passed away from serious economic consideration.

Some would have us return to the gold standard--an unrealistic and deeply flawed system of managing money and economic activity. It may have worked to some extent in a bygone era of simpler times, but by even the 19th century its serious limitations were recognized.

There are, in fact, many interesting things that one could discuss about central banking and the Fed, and not all of them put the Fed in a complimentary light. For sure, it has made some spectacular blunders, and any reasonable person should be open to rational and informed discussion about the Fed's overall performance. I simply find it much harder, however, to tolerate the kind of blind rantings contained in Mr. Meglen's comments.

By the way, Ms. Rivlin, whom Mr. Meglen enjoys maligning, is a brilliant and wonderful person who has spent most of her life as a dedicated and underpaid servant of the people. It's hard to believe that she once was a secretive and conspiratorial central banker!


carlyle 7 years, 7 months ago

Was it Alan Sproul who wrote "Confessions of a Central Banker"? I also like Ms. Rivlin. Re Mr. Friedman: I think both of his major claims to fame; reasonably stable multipliers that connect to stable money growth; and the 'permanent income hypothesis', to be proven wrong, or at least the world has changed enough to prove both no longer appropriate in trying to figure things out. But I will also say he was a wonderful teacher (George Stigler was every bit as good). With so many very smart and dilligent people involved in the status quo, I don't think any country will decide to do without their central bank, and I agree that the gold standard is simply impractical. Keynes got a few things right. Some of the descendants of Hayek and Mises do have alternatives to central banks that do make some sense. I just worry that the next disaster, whether it occurs in ten or fifty years, will totally bring the modern financial system down. Our latest catastrophe came surprisingly close.


JLM 7 years, 7 months ago

What's funny about the recent economic woes is that doing nothing may have been as good an alternative as what was done. The world will survive the demise of Lehman quite nicely and perhaps AIG should have faced the same fate.

As to central bankers, what is the real, tried and true alternative?

There will always be economic ills which will require intervention --- sometimes simply creative destruction by market forces allowed to resolve the situation with a "natural" resolution: failure --- by something or someone to make them right.

The idea that the Fed is a great conspiracy is silly. Why do all those wicked conspiratorial PhD economists live in such ratty homes? LOL

Ooops, got to go, my black helicopter has arrived!


Joe Meglen 7 years, 7 months ago

Calling those who do not support your beliefs; paranoid, idiots, ignorant, simple minded and conspiracy theorists demonstrates that you have little foundation for your own position.

If Keynesian economics was being taught when those students fell alseep in the back of the classroom, they are better off for it.

It would have been more accurate to state that the FED doesn't depend on reserves. They don't have to. They create money with simple keystroke. The FED does have unknown billions of toxic asset on their books. The reason they are called toxic is because they have little value. The FED may still hold some of the gold that was stolen by FDR from the U.S. citizens. Just because a thief still holds the stolen property, the property still belongs to the original owner.

I received an ample dose of academia's economics in pursuit of majors in international marketing, finance, security investments and business administration. Fortunately, I am old enough that some of my professors were schooled in Classic or Austrian Economics. After running a U.S. based international business for 30 years you also get a real world dose of the effects of central economic planning. My real world experience has proven that the single greatest obstacle to making money and keeping it is the government. They will not teach you this in public schools. Two, outstanding books worth reading before teaching another class in economics are: "Economic Depressions, Their Cause & Cure by Murray N. Rothbard, and "The Great Economists" by Randall G. Holcombe. Your students will benefit from it.

The "Maestro" Alan Greenspan, Chairman of the Federal Reserve from '87 to '06 warned against fiat money when he wrote in 1966: "In the absence of the gold standard, there is no way to protect savings from confiscation through inflation."

Some facts: A dollar earned in 1800 would buy the same basket of good and services in 1913 as it did in 1800. Since the creation of the FED the dollar has lost 96% of its value. The FED has facilitated the geometric growth of the welfare and warfare state. The government's unrestrained spending has bankrupted this country.

Economic central planning doesn't work. The idea that an elite group of enlightened economic and financial planners can make better decisions than the billions of free market decisions made by individuals every day of their own free will - is the height of arrogance.

The FED should be audited, not because their shenanigans will necessarily be determined to be illegal for it works in harmony with the federal government, but to reveal to the citizens what the FED is and how it operates. Then the FED should be abolished, just as the prior three U.S. central banks have been abolished in the past.


ybul 7 years, 7 months ago

Anthony if the federal reserve were open and allowed oversight, why not audit it.

JLM, if it we left the economy to its own devices, would it not recover on its own. Yes there would be pain, but if people were held responsible for their own actions and allowed to fail then they might be more responsible. This in turn lead to a world where problems would not be so big that intervention needed to occur.

In addition the tried and true alternative to central banking, as it stands now, would be difficult to find as the European Bankers have held control of most monetary supplies for so long that we can not remember. Maybe an audit of the Fed, which has had little real oversight and why people are clamoring for it. The $10 trillion in loans (of fictional money) that the fed made and Bloomberg sought to find out where it went and sued.

Is not money a store of wealth also? In my education that is what it is supposed to be. However, if some group of people is allowed to create it with the stroke of key, while the rest of us must create it through hard work, how fair a society is that?

Yes central banking has worked well, look at the central banking that is going on in Zimbabwe today, Latin America in the 80s. The world currency markets are screwed up and as Americans it was hard to say anything for a while as we were able to live so well. However, with the ability to coin money from nothing, foreign governments were able to print up there own money out of thin air, and buy US treasuries, facilitating lower costs of doing business in their country and no qualms came from our government as it facilitated them to take on way too much debt as the cost of borrowing was artificially low as those foreign countries needed to buy US debt in order to peg their currencies.

Unfortunately the PHD economists, just like everyone get so entrenched in their belief systems that change is slow to happen. Max Plank, a nobel prize winning physicist, stated that change happens one tombstone at a time.

This is a prime example, as those who have the power are very tied to the central banks existence. Those who are closest to the creation of money (able to borrow or who sell to those who borrow) end up doing far better than those further removed from the creation of money.


JLM 7 years, 7 months ago

The Fed does not "create" money at a stroke of a key. They create "promises to pay" and borrow it just like everybody else.

The observation that the Fed is filled up w/ tons of toxic assets is right on the money. But like some things --- like the secret (?) operations of the CIA --- they are better left unknown by the general populace. Not a terribly democratic thought I admit but a pragmatic one nonetheless.

A bit of inflation is good --- very good --- for the economy. We are a nation of borrowers and the ability to repay long term debt with "cheaper" future dollars and perhaps a bit of positive financial leverage is a good thing. It is like a chemo therapy dosage --- a bit of the poison is good but too much kills the patient. It is fair to say that there are some folks who are better at prescribing and controlling the dosage than others.

Central bankers never really know how to make money. Folks who really know how to make money very rarely get involved in banking or in politics on a practical level. [That is why I am so high on Mitt Romney, alas!]

The statement that our government is the greatest impediment to the creation of wealth is the truest statement ever uttered. Our current government, which shall not last forever and which may not last beyond the 2010 elections, is the worst in a long time as it literally seeks to penalize talent, expertise, hard work and success while simultaneously trying to coax job creation out of the same slice of Americans. Give me a spot of waterboarding instead! Please.


Anthony Cyrnak 7 years, 7 months ago

Whew! I don't know where to begin to respond to everyone's comments.

Meglen: You're right about central planning not working very well, but since when have we had central planning in the U.S.?

Ybul and Meglen: Yes, people and companies should be held accountable for their actions, but the Fed will not allow the country to go down the drain economically just to impose some discipline on bad behavior. That is what the Fed did at the start of the Great Depression, and it was an economic disaster for the country and imposed terrible costs on just about everyone. Is that what you want to do just to impose "discipline" on a few bad actors? The Fed will never allow the economy to crash and will do whatever it takes to keep the country afloat economically--and that includes lending out gobs of money to anyone who needs it and has some collateral to put up (toxic or otherwise). You may recall that this is the whole reason that the Fed was founded in the first place--to be a lender of last resort.

Ybul: Don't confuse central banking in developing countries with central banking in the U.S. In most countries, the central bank is the local money arm of whatever administration is in power. In the U.S. the Federal Reserve was specifically structured so as to provide a strong degree of independence from both Congress and the executive branch. There are numerous instances in history of the Fed resisting congressional and executive branch calls for easy money policies.

JLM: you're right in saying that a little inflation is a good thing for our economy. Not sure you're correct about the amount of toxic assets currently held by the Fed. At this point, the true value of the Fed's loan collateral is not known by anyone, the Fed included.

Everyone: Why does everyone bash the government (local, state, federal) as the biggest meanie in town? Without government it is doubtful that people would follow the rules that make for an orderly society, including business practices and criminal behavior. Without government we would have collusive behavior, little or no national defense, little infrastructure, no judicial system and a host of other ills. I'm always amused when people say that we don't need government or that government is too intrusive or too costly. Don't forget that we live in a representative democracy, and so not every dollar you are taxed will be spent on things that you personally approve of. The best you can do is to vote for the person who most closely believes what you believe in, no?


Joe Meglen 7 years, 7 months ago

Mr. Cyrnak,

There is a proper role for government. It should be a limited Constitutional government as originally envisioned by the founders. The framers wrote the Constitution to protect the people from the government. They wanted a weak federal government that was subservient to state's rights. In their wisdom, the founders knew that if the states were not sovereign and powerful, the federal government would swallow them. In winning the Civil War (The War of Northern Aggression from the Southern viewpoint) Lincoln accomplished by brute force, what the Whigs (which later became Republicans) could not accomplish legally; kill the Constitution. What was left of the Constitution following Lincoln's illegal war, has been further eroded by legislation and decisions by the Supreme Court. Invariably, when the federal government is "interpreting" the Constitution, it somehow finds more power for the government and less for the citizens. The creation of the Federal Reserve System was the final nail in the coffin. Once the government had access to almost unlimited funding, there was little restraint.

The founding fathers went to war over a three percent tax without representation. Today, if a citizen lives to be 90 years old, the government will have confiscated 90% of his wealth through direct taxes and the hidden tax of inflation. Even as surfs our ancestors from Great Britain were allowed to keep 50% of what they earned while working the Lord's property. We have become, at best, indentured servants to a government that, according to the Constitution, is supposed to be our servant.

We have reached a point where the government now consumes 40 + percent of our GDP and this is growing quickly. 53 percent of the population now receives some form of payment from the federal government. As we degenerate further into a European style social democracy, we approach a tipping point where we have what the founders feared; the dictatorship of the majority over the minority. The founders would not recognize America today. Our government is worse than the government that the founders went to war against. They would be ashamed of us.


Stan Zuber 7 years, 7 months ago

"Revolutions are successful when an organized minority discovers that the majority is split, is indifferent, confused, without vigilance. Then it is revoluntionary tatics to confound and disconcert the majority by side issues, by speeches on humane subjects, by beating the drum of progress and liberalism. They play on humane distress, they create emergencies." "Prior to 1913 we prospered like no other Nation in History because the Congress issued and controlled our currency, as laid down by the Constitution. On December 23, 1913, Congress delegated this all-powerful privilege to a Private Corporation under the control of the International Financiers-known as the Federal Reserve System. President Wilson kept Congress in session until the F.R.A. was passed-two days before Christmas, when many had left for home and those remaining, anixious to go home."

Excerpts from " Conquest or Consent" by W. B. Vennard.

Thus the beginning of " The American Economic Revolution". Timing was everything. The rest is History.

It appears money has become the master not the servant.


ybul 7 years, 7 months ago

Mr Cyrnak

 So you praise the fed for its actions in trying to keep the economy out of a financial meltdown and yet it was the feds actions of manipulating interest rates that has put us where we are today.

 The fed seeks more control today, and yet it fails to open its books for audit.  ALL OF ITS PROFITS are the result of theft from those who work hard and create wealth.  THE FED CREATES ZERO NEW WEALTH, it simply prints money to buy government debt.  (sometimes it does take money out of circulation by selling that debt back off.  However, as inflation shows credit and monetary creation have been the rule for its existence).  The fed is like a drug dealer, in that it has facilitated cheap credit terms to the government.  With the fed created Depression because of cheap lending terms it got its foot in the door to facilitating the US government and peoples borrowing addictions, putting us in the state we are today, on paper the wealthiest nation in the world and yet by far the most in debt.  If you look at assets vs liabilities we as a nation are not as wealthy as everyone claims.  We just have the highest level of consumption.


YEP inflation is great for the borrower, however, the saver is penalized for their prudent actions. In a free market there would be no inflation, simply price appreciation/depreciation. Price depreciation was the norm for the first 100+ years of this country until 1913. (the government being the largest borrower will probably never want this to change)

Today, given the feds ability to buy government debt, or any other debt, they are coining money. While they may not be creating a new dollar bill, they still are creating a vehicle which acts the same as a dollar bill. This debases the currency and is why and the definition of inflation.

Yep the ability to borrow money is a good thing and helps they economy. However, as there is no underlying value of the currency, the fed has the ability to steal, the stolen amount less operating costs are supposed to be returned to the federal government, However, the fed has not been audited in its near 100 year existence. If you were able to legally steal from people and give the government its take, were not audited, what would stop you from not skimming an ever larger share of the profits from your actions.


Anthony Cyrnak 7 years, 7 months ago

I can see that most of you have pretty strong feelings about the Fed! Ok; Ok. . .audit the Fed, and what do you think you're going to find that you don't already know about? Not much, I can tell you. The reason that the Fed has resisted being audited all these years has to do with preserving its independence from the rest of government. The thinking here is that the power to audit equals the power to interfere with the Fed's operations and possibly with monetary policy. And be honest, do you really want some political hack congressman or senator handling monetary policy for the U.S.?

You don't, because first of all they know nothing about monetary policy and how to conduct it (it's pretty complicated). Politicians want easy money policies whenever they're in office, because it makes them more popular and more likely to get re-elected, which is always a politician's first and foremost goal. Thank your lucky stars that monetary policy is conducted by an independent government agency that earns its own income and is not dependent on congressional appropriations (historically, by the way, the Fed has annually returned more than 90 percent of its earnings back to the Treasury Dept.). Calling Fed profits the result of "theft" seems pretty ridiculous to me.

Also, the Fed is not a private corporation that was founded by international financiers. It is an independent government agency that was created by Congress to put an end to the devastating credit crises that occurred regularly in the 19th century. Furthermore, if you were to go back to the "good old days" prior to the Fed, you'd be looking at J.P. Morgan as the private central bank of this country. During financial crises caused by bank runs (which were common prior to the Fed) it was Morgan who ultimately decided which banks would survive and which would fail. How democratic was that?

"Dictatorship of the majority over the minority?" I'd call that a democracy, wouldn't you?

Interestingly, despite the tremendous amount of money poured into the economy recently, there has been no sign of inflation. And depending on how smart/lucky the Fed is, there may be only a little inflation down the road.

Finally, what's all this talk of the "founders?" In case you haven't noticed the world is a much different place than it was 200+ years ago. Personally, I've always thought that the founders would have changed their thinking along with the rest of us if they had been alive all this time. I mean, really, do you want to govern our country as if it were still 1789? I wouldn't.

Oh, and keep in mind that the Fed is not responsible for the spending habits of the executive branch and the congress. Taxes are levied by the Treasury Dept. (not the Fed), and spending programs come from the White House and Congress (not the Fed). Please don't blame the Fed for our deficits.


ybul 7 years, 7 months ago

If interest rates were higher, then the government could not borrow as much. The federal reserve through open market actions helps to peg interest rates at levels which it decides. Facilitating the governments ability to borrow.

To the letter of the law, the fed is not stealing today. However, it is simply legalized theft when it debases our currency through inflationary practices it uses. While it is not theft in terms of the law, if you were in a poker game with a fixed buy in that all paid in for, the house gave all of you your chips and then over the course of the game continued to add chips to the game to select individuals to keep them in the game with no additional ante, what would you call that?

That is essentially what the fed is doing today and creating inflation in the economy by adding to the credit and monetary supplies.

To your inflation comment, maybe you should not use government statistics to base your inflation claims and look towards the price of food, energy and other things. Yes they have have been forced down this year. However, in looking at trends you tend to throw out the highs and lows and take the baseline and see where it is headed. You would have to have your head in the sand to not say that the base cost of living is not increasing. Those need items food and energy are rising while the want items might be falling in value.

While you may claim all of this has nothing to do with the fed. However, it has everything to do with the fed and its movement from some form of pegging of the dollar to a real world asset for clearing if people wanted to. Be it a fixed basket of goods, services or gold. However, today it is a a promise that I can pay my taxes with it. While the idea of pegging the dollar to gold/silver might sound antiquated, it does have a property that most other items do not have an exceptionally long shelf life.

Yep walking around with a bag of gold might be difficult, however, walking around with dollar bills that if you decided to turn in for gold at some point surely alleviates most pundits beliefs that a gold standard is antiquated.

It is about protecting the value of ones hard work. It is about protecting private property rights. If the government reviewed peoples personal savings accounts and took 2% of their savings on an annual basis and gave it to those who borrow people would get upset. That is exactly what is happening via inflation.


StopTheBrutalChemtrails 7 years, 7 months ago

It appears as if Mr. Cyrnak's research has been a bit one-sided.


Joe Meglen 7 years, 7 months ago

The comments to my letter to the editor on Alice Rivlin's speech are encouraging. I am pleasently surprised to learn that there are so many informed critical thinkers living in Steamboat.

In addition to the many great comments, I must complitment ybul. In addition to your other excellent contributions, your poker game anaolgy is outstanding. I wish your were teaching economics at our local community college.

Excuse me for the incomplete comment to follow. I am short on time. Mr. Cyrnak's comments regarding the Federal Reserve being a government agency requires correction.

In an interview with Jim Lehrer, when asked if the Federal Reserve was a government agency Alan Greenspan said: "Well, first of all, the Federal Reserve is an independent agency, and that means, basically, that there is no other agency of government which can overrule actions that we take. So long as that is in place and there is no evidence that the administration or the Congress or anybody else is requesting that we do things other than what we think is the appropriate thing, then what the relationships are don't, frankly, matter."

In Lewis v. United States, 680F.2d 1239 (1982) the 9th District Court rules that the Federal Reserve Banks are not Federal, but are independent, privately owned and locally controlled corporations.

This is not to say that the FED does not have some government regulation, but both the FED and the government have a cozy relationship that, by design, transfers wealth from one class of citizens to another.


mmjPatient22 7 years, 7 months ago

The Fed is about as federal as Federal Express. Due to our economy, it has become a necessary evil. And I stress Evil.


Joe Meglen 7 years, 7 months ago

Mr. Cyrnak

For once we agree. Political hacks should not be handling monetary policy. Neither should a private banking cartel. Monetary policy should be handled by the free market. When private corporations or politicians handle monetary policy, they pick the winners and losers, and invariably the average citizen comes out as the loser. The Constitution states: "The Congress shall have the power to coin money and regulate the value thereof." The original intent is that Congress was to certify that the currency had the correct precious metal content. That should be the end of the government's involvement in monetary policy.

It is true that most of the money paid by the government for interest on the national debt is returned to the government. The FED's charter stipulates that interest payments in excess of its operating expenses are to be refunded. However, the FED is able to use tax dollars to pay 100% of its expenses. The real "gold mine" comes from money created out of nothing by the commercial banks and loaned to the private sector. They earn interest on nothing through the Ponzi scheme called fractional banking.

There are two segments to society. One segment produces wealth and pays taxes. The other segment confiscates wealth consuming taxes. My bet is that those that produce and pay would prefer a return to a smaller Constitutional government. Those that consume taxes prefer the welfare/warfare state we have today. Unfortunately, at some point the parasite kills the host.

Congress is responsible for government spending. If they wanted to balance the budget, they could. They don't want to. It is the nature of government to grow unless it is somehow restricted. Constitutional sound money restricts government spending and growth. The fiat money created by the FED has allowed Congress to spend us into near bankruptcy. If you can still borrow the interest you are not quite bankrupt. Government can only spend more than it has for a limited period of time. We have reached a point where it is becoming more difficult to sell our bonds at the same time the tax revenues are plummeting. If there is any silver lining, these forces may stop the exponential growth of government. A real danger is that those that are desperately invested in preserving the status quo repudiate the debt by inflating. In either scenario, the next 20 years will be a lot different than the last 20.


John Marno 7 years, 7 months ago

I hope I am not the only reader that actually checked the Prison Planet site referenced above, as well as the hilarious Anti-Fec video on the Mises Institute's site. Once I got done laughing, I did some research myself. Yes, there are points to be made against over-centralization of ANYTHING; the Federal Reserve notwithstanding. However, there are large flaws in the arguments for the Austrian Way (sic), Sound Money (is Gold really more valuable than....Potatoes?), and asking readers to go to Alex Jones' site where commenters incite violence. I strongly encourage readers to really check facts, and keep an eye on those who crow the loudest. I would also encourage readers to check out a publication called "The Intelligence Report", put out by the Southern Poverty Law Center. There is a growing Patriot movement in this country, and anhialiation of the Fed is one of their agenda. Please be careful.


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