Thursday, December 5, 2013

Nationalize the Federal Reserve

Brandon Turbeville
December 4, 2013

The United States today finds itself in the midst of a crisis which exists on a multitude of different levels. From the establishment of a culture of constant warfare, increasing environmental degradation, and the devolution into an outright police state, the perils of the current system are easily visible to those with eyes to see. 

Nowhere, however, is the crisis more visible than in the manifestations of the world economic depression.

From mass unemployment (estimated at approximately 25% when all factors are considered) and a growing national debt to a ballooning trade deficit and the loss of purchasing power of the dollar as well as decrepit and crumbling national infrastructure, the United States today faces a crisis of epic proportions.

Most of the blame for this economic calamity, of course, can be directly traced back to the treachery of private bankers, Wall Street, and the practice of usury combined the acts of the agents of these financiers in the halls of government at some point or other. Ever since the Federal Reserve was solidified as the perceived national bank of the United States, the most powerful nation on the face of the earth and, thus, its people, were placed under the rule and at the mercy of private bankers. The economic health and future of the United States was placed in the hands of the very elitists and financiers from which the American people should have been protected. As a result of the Federal Reserve Act of 1913 and subsequent policy, the power of issuing currency and credit, the ability to cause mass inflation or deflation, and the opportunity to orchestrate booms and busts, productivity and depression, was placed in the hands of private bankers who were granted the authority to act completely independent of the authority of the United States Federal government. Thus, the U.S. Federal government has now been reduced to reacting to the decisions made by the private Federal Reserve instead of the Federal Reserve acting as a truly national central bank and reacting to the decisions made by the Federal government.

Although criticism of the Federal Reserve system has existed since 1913, both the criticism and the level of knowledge surrounding the history and purpose of the institution has increased to such a scale never before witnessed. With an understanding of the unconstitutional abrogation of Congressional authority, the massive amount of control now held by private bankers, and the current economic conditions that have resulted, many informed Americans have rightly become antagonistic toward the Federal Reserve and have adamantly called for changes to be made to the system.[1]

Yet, unfortunately, the solutions put forward by the majority of the Fed’s critics involve the knee-jerk reaction of simply eliminating the Federal Reserve altogether, a philosophy that is neither prudent nor beneficial to the American people. Simply removing the Federal Reserve as an institution is both a wholly inadequate measure to combat the power of finance capital and Wall Street over the Federal government and the American people as well as an inadequate method by which to orchestrate an economic recovery. The philosophy mentioned above can often be heard being repeated by very well-meaning activists and individuals as the phrase “End the Fed.”

Ending the Fed, however, while sounding euphonious and clever, would nonetheless be a disastrous policy for the United States and the American people as it would immediately usher in an age of austerity while doing absolutely nothing to reduce the amount of control private bankers and the cartel masquerading as the national bank currently have over the U.S. Federal government.

Simply ending the fed would, in one fell swoop, eliminate the “buyer of last resort” option for US national debt and cause the collapse of the American economy. In addition, although the Federal Reserve does not currently serve in its proper function as provider of credit and funding for the US government, ending the Fed will eliminate a major source of funding, leaving taxation as the only method of income. If the Federal government wishes to borrow money, outside of printing more of it and throwing itself into an inflationary spiral, it will then be forced to borrow directly from Wall Street, the very same money lenders who will immediately regain control over the issuance of currency, the amount in circulation, and economic cycles. Thus, before the offices of the Federal Reserve board are cleaned out, private bankers will have already regained control over the operation of the government as a whole. 

Still, the question remains as to how to end the power of the Fed (i.e. the private bankers) as it exists, return the Constitutional authority over monetary policy back to Congress, and break the power of wealthy financiers and banking cartels over the Federal Government. 

The answer to that question is not to simply end the Fed but to nationalize it. Nationalizing the Federal Reserve would not only return Congressional power to its rightful place as guaranteed in the U.S. Constitution and break the power of Wall Street over the monetary policy of the United States, but it would also provide the opportunity to eliminate debt, reduce inflation, improve infrastructure, jumpstart a recovery, and usher in a new era of scientific progress the likes of which the world has never seen.

Thus, it is not wise in any real sense so much as it is possible to end the Federal Reserve system nor is it likely that one would gain any element of true populism by simply demanding that we “End the Fed,” particularly due to the age of austerity and the parallel banker control that would inevitably result from such a policy. It is imperative to offer legitimate solutions and a clear way forward when making a political demand. For that reason, it is the Nationalization of the Fed that should be demanded, not the simple abolition of it.
With that being said, at least three aspects to the nationalization of the Federal Reserve must be explained in order to justify it. These points are as follows:

1.) How to Nationalize the Federal Reserve

Although the specific manner in which the Federal Reserve is nationalized should not be the main focus of the action and demand to do so, there are two possible ways that such an undertaking could be accomplished. The first, and most desirable, is the passage of a law by Congress which nationalizes the Federal Reserve under the U.S. Department of the Treasury. This method is the best case scenario as it demonstrates Congressional will, common agreement, and process legitimization. However, in the absence of Congressional will, there exists the forceful act of the Executive. Essentially, it is entirely possible for the Federal Reserve to be de facto nationalized by a simple Presidential phone call to the Chairman of the Fed demanding specific lines of credit for specific purposes with clear repercussions if these demands are not met. Although a full law would be the ideal circumstance for the reconquering of American monetary policy by those to whom it rightfully belongs, any and all means available can and should be used.

2.) How to Use the Federal Reserve to Jumpstart a Recovery

Essentially, there are three different types of economic stimulus which involve government spending – Hot money (money printing, quantitative easing, etc.), on-budget spending, and credit stimulus. It should be noted that Austrian school economics proponents may attempt to argue that their own version of economic stimulus (meaning austerity) may jumpstart a recovery with no government spending at all. This idea involves mass liquidation, deflation, and budget cutting. However, considering the history of Austrian school economics and its proven failures in that regard, Austrian school economics stand as antithetical to a modern prosperous society and leave a trail of poverty, destruction, malnutrition, and stagnation in its wake.[2] Thus, Austrian school economics will not be addressed in this article as a legitimate source of an economic recovery in this article. 

With that being said, the first method of economic stimulus mentioned above – Hot money – has been widely criticized by many individuals on both sides of the political paradigm due to the fact that such “stimulus” does virtually nothing for Main Street while subsidizing and encouraging the risky behavior of Wall Street. In addition, because the “hot money” approach involves the extension of cheap credit to financial institutions, creation of debt, and the creation of new money out of thin air which finds its way into the system, inflation and the devaluation of currency necessarily occur. Taxation through inflation is a direct result of money printing and the “hot money” approach as is the ballooning of parasitical financial institutions as they feast on the money handed to them on a silver platter.[3]

The second method of stimulus is the Keynesian application of “on-budget” spending which involves the accumulation of public debt in order to provide the funds for a stimulus program. This method is slightly better due to the fact that government spending in infrastructure or other relevant development programs does indeed create jobs and related industry. However, on-budget stimulus is limited in what it is able to do by the fact that the spending taking place must be acquired by taxation or borrowing. Over-burdening the public with taxation and creating unsupportable debt (to private banks) is the inevitable long-term result of such stimulus regardless of how many jobs it creates in the meantime.[4]

A third method of stimulus, however, is much more capable of creating an economic recovery. This is the method referred to as credit stimulus. Credit stimulus, provided it is conducted by a nationalized central bank, is capable of jumpstarting a recovery due to the fact that it does not involve simply printing money and spending it into circulation nor does it involve the creation of debt to private banks. Credit stimulus issued by a national bank would not create a culture of unsupportable debt because the debt itself would be held by an arm of the Federal government, an unlikely source of foreclosure against the Federal, State, or local governments in the event of lack of repayment, an unlikely circumstance to begin with.[5]
 
Indeed, trillions of dollars worth of credit was issued to Wall Street during the course of the 2008 housing crisis. If credit from the Federal Reserve and the U.S. Treasury was good enough for Wall Street, it is good enough for Main Street. This, then, is the method which should be selected to jumpstart an economic recovery after having nationalized the Federal Reserve.

3.) What credit stimulus from a Nationalized Federal Reserve should be used for:

According to the American Society of Civil Engineers who recently released its 2013 Report Card For America’s Infrastructure, estimates suggest that the United States would need to invest $3.6 Trillion dollars in its infrastructure by 2020 simply to achieve the overall ranking of “good” which is represented as a B on the ASCE report card. 

In addition, the innovation and leadership in regards to scientific progress in which America once dominated is a feature that no longer appears to exist domestically. In infrastructure, education, science, medicine, and real economic activity (productivity), the United States is nothing more than a shell of its former self. Yet this does not have to be the case nor does it have to be the future for America. A nationalized Federal Reserve, particularly together with a 1% Wall Street Sales Tax to eliminate Federal, State, and local budget deficits as well as fully finance the social safety net, education, and a true program of universal healthcare, would be a tremendous step forward in creating an environment of virtually full employment.

For this reason, Credit Stimulus can and should be used to jumpstart a recovery first by means of repairing existing infrastructure and building new infrastructural systems as will fit the needs of modern America. This should be accomplished by a nationalized Federal Reserve acting as a truly state-owned central bank buying up the bonds of states, regional projects, and local governments for the specific purposes of rebuilding subway systems, highway systems, water treatment facilities, railway systems (freight and passenger), bridges, electricity and power production facilities, canals, ports, sewage systems, telecommunications, libraries, hospitals, schools, public and government buildings, as well as other relevant aspects of infrastructure. 

The terms of these bond purchases should be simple. First, they should be predicated upon real improvement and creation of legitimate infrastructure such as the projects mentioned above. No pork or pet projects. Second, the interest rate of these bonds should be set at 0% so as to preclude any usury between governments and to eliminate usurious forms of government and public debt. Third, these bonds should be issued with a maturity date of 100 years, a type of bond commonly referred to as century bonds. This will allow for reasonable “repayment” on a reasonable time scale with adjustments made for the need of the government receiving the credit as the economic crisis may demand. There should be no foreclosure or bankruptcy resulting from this extension of credit.

A newly nationalized Federal Reserve should immediately issue a tranche of $3.6 trillion of such credit to Federal, State, and local governments as well as regional projects in order to upgrade current infrastructure to a satisfactory level with subsequent tranches of $1 trillion to be issued as needed after the first tranche of $3.6 trillion is expended. The goal in this endeavor is not only to upgrade and improve the national infrastructure but to create what amounts to full employment. The jobs provided by this credit stimulus should be high wage and union pay scale.

Improving infrastructure to adequate levels, however, is not the only potential use for the purchase of Federal, State, and local bonds as the goal should obviously be to create new and more efficient, environmentally friendly, and highly developed forms of infrastructure – be it in waste treatment, power and electricity, construction, or transportation. For instance, high-speed rail should be an immediate priority as should the development of alternative means of power and electricity from a variety of sources such as wind, solar, or some other source of power. In the meantime, however, it is important to upgrade and safeguard those methods of power that we currently maintain whether including water, nuclear, or coal. 

Likewise, it is important to use such century bonds for the funding of science drivers in each of these respective industries as well as for the achievement of goals that are currently presented as unattainable in the foreseeable future. Thus, in addition to the funding of development of alternative and truly clean/free sources of energy and power, more efficient means of transportation, and other improvements to existing infrastructure, investments must be made in scientific discoveries regarding health and medicine, space exploration and colonization, legitimately environmentally friendly technologies and methods of production, and other laudable goals. 

Clearly, as jobs rebuilding infrastructure and engaging in scientific exploration and development begin to appear, subsequent industries will no doubt begin to appear alongside them due to the increase in spending as a result of the new high-wage jobs initially created by the infrastructure investment.

With this in mind, it is important to understand that this method of stimulus can and should also be used to stimulate not just government-based jobs but also the private sector. This can be done by offering low to no interest credit to the private sector manufacturers in all industries who are willing to refurbish aging factories currently lying dormant and empty all across the nation. Interest free and/or low-interest Federal credit should be issued to those manufacturers and producers who are active or are willing to become active in areas of tangible physical production. These productive jobs should then be safeguarded by means of a protective tariff. In addition, such credit must not only be available to large companies or individuals who are “thinking big” but should be available all the way down to the local business owner – restaurants, electricians, HVAC, mechanics, plumbing, etc. For far too long, Wall Street has been the recipient of tax payer subsidies for risky financial derivatives and financial services which produce absolutely nothing. It is time for Wall Street to take a back seat to Main Street.

Lastly, a nationalized Federal Reserve would be able to refinance student loans via the Department of Education and relevant agencies that are currently burdening a large portion of an entire generation of Americans. Education, particularly in the area of high skills, is a necessary ingredient to a well-trained workforce of high wage workers. This is especially true if the United States is to take the lead in scientific development. Furthermore, if an entire generation is saddled with such unreasonable debt as to preclude them from the ability to buy a house, support a family, and otherwise lead a comfortable life, then the United States is on the fast track to creating its first “lost generation.” By refinancing student loans through the Federal Reserve at less than one percent or even zero percent interest, this generation will be able to free itself of such debt and a new generation will be encouraged and enabled to learn the skills that will be needed for the initiation of a new economic system based on productivity.

While it is true that the implementation of the 1% Wall Street Sales Tax or the Nationalization of the Federal Reserve is not the ultimate goal of any resistance or revolution in and of itself, both policies would rank as one of the major efforts needed to break the power of private bankers over the general public and as one of the main efforts toward rebuilding a working economy built upon production and human progress. 

It is also true that power concedes nothing without a demand. Unfortunately, the American people, activists, and the alternative media are fast approaching a time that demands must be made if there will be any hope of success. 

No matter how important other issues may be to us - whether they be privacy, civil liberties, the environment, or war and peace - it is well -understood that the majority of the general public in any country can only be rallied when the issues they face involve the amount of money they make and the amount of food they eat. The cause of nationalizing the Federal Reserve is a cause that affects virtually every other issue of concern held by activist communities because it affects one of the most powerful tentacles of the ruling elite – the control and influence wielded by Wall Street over the vast population. There is no doubt that it affects the very basic economic concerns held by the average American.

It is time to take back what rightfully belongs to the people of the United States. It is time to Nationalize the Federal Reserve.

NOTE:

Much of the impetus behind the program and list of demands contained in this article were inspired by the work undertaken by Webster Griffin Tarpley whose book, Surviving The Cataclsym: Your Guide Through The Worst Financial Crisis In Human History is an indispensable guide to understanding the current economic situation in the United States and the solutions needed to fix it.

Likewise, an organization having arisen out of this same mode of thought, the United Front Against Austerity, has been instrumental in providing legitimate solutions in terms of the American economic crisis.

Lastly, a new political party that strives to implement the demands and programs enumerated in this article (among others), combined with a respect for basic civil liberties and human rights, has arisen on the 
American political scene. The Tax Wall Street Party is an attempt to provide a true alternative to the current corrupt and illegitimate political paradigm of Democrats and Republicans. The Tax Wall Street Party can be found at TaxWallStreetParty.org. Their program can be found here.


[1] Griffin, G. Edward. The Creature From Jekyll Island: A Second Look At The Federal Reserve. 3rd Edition. Amer Media. 1998. http://www.amazon.com/The-Creature-Jekyll-Island-Federal/dp/0912986212
[2] Tarpley, Webster Griffin. Surviving The Cataclsym: Your Guide Through the Worst Financial Crisis in Human History.” 3rd Edition. Progressive Press. 2011. http://www.amazon.com/Surviving-Cataclysm-Through-Financial-History/dp/1615776001
[3] Tarpley, Webster Griffin. Surviving The Cataclsym: Your Guide Through the Worst Financial Crisis in Human History.” 3rd Edition. Progressive Press. 2011. http://www.amazon.com/Surviving-Cataclysm-Through-Financial-History/dp/1615776001
[4] Tarpley, Webster Griffin. Surviving The Cataclsym: Your Guide Through the Worst Financial Crisis in Human History.” 3rd Edition. Progressive Press. 2011. http://www.amazon.com/Surviving-Cataclysm-Through-Financial-History/dp/1615776001
[5] Tarpley, Webster Griffin. Surviving The Cataclsym: Your Guide Through the Worst Financial Crisis in Human History.” 3rd Edition. Progressive Press. 2011. http://www.amazon.com/Surviving-Cataclysm-Through-Financial-History/dp/1615776001