Supercop or Super-terminator
One of the checks on inflation in a free market banking system is competition among banks. Inflating their money supply—issuing more notes than money in their vaults—places banks in a dangerous situation; one which, in fact, threatens their existence. If a bank cannot redeem its deposits in cash, it is insolvent and must close its doors.
When banks competed with one another, if there were a bank run the unsound banks were the first to fail—they didn't have enough money in their vaults to pay their depositors.
Of course, America has never really had a completely free banking system. Banks have always had to comply with licensing laws—often they were forced to buy bonds issued by their respective states in order to receive a charter. Much like today, the banking system also received state privilege. For example, when the nation was under a gold standard, the government allowed troubled banks to suspend payment in specie, i.e. the banks could refrain from redeeming their notes for gold while still issuing notes and collecting interest on loans.
Banks make money by collecting interest on loans. Fractional reserve banking allows banks to literally "create" money to loan thus drastically enhancing a bank's profits. Even in a system that legally allows fractional reserve banking—like the one America has always had—banks that hold a higher deposit reserve act as a check on the banks which hold lower reserves which ensures more profits but places them at greater risk.
Without a regulatory body to force compliance among all banks, the inflationists are held in check. No wonder the big banks were instrumental in the creation of the Federal Reserve. As the lender of last resort, the Fed can bailout the unsound banks, removing risk from the system and forcing all the banks to adopt the same deposit reserve ratio if they are to remain competitive.
When the Fed was created, the American people were told that the Fed would protect them from the economic mayhem caused by an unregulated banking system. The truth is that the Fed was created to protect the big banks (J.P. Morgan and John D. Rockefeller were key figures in the Fed's creation).
In the free market, risk mitigates greed. The Fed has removed the risk from the banks and placed it on the American people.
The Fed is already responsible for regulating:
When banks competed with one another, if there were a bank run the unsound banks were the first to fail—they didn't have enough money in their vaults to pay their depositors.
Of course, America has never really had a completely free banking system. Banks have always had to comply with licensing laws—often they were forced to buy bonds issued by their respective states in order to receive a charter. Much like today, the banking system also received state privilege. For example, when the nation was under a gold standard, the government allowed troubled banks to suspend payment in specie, i.e. the banks could refrain from redeeming their notes for gold while still issuing notes and collecting interest on loans.
Banks make money by collecting interest on loans. Fractional reserve banking allows banks to literally "create" money to loan thus drastically enhancing a bank's profits. Even in a system that legally allows fractional reserve banking—like the one America has always had—banks that hold a higher deposit reserve act as a check on the banks which hold lower reserves which ensures more profits but places them at greater risk.
Without a regulatory body to force compliance among all banks, the inflationists are held in check. No wonder the big banks were instrumental in the creation of the Federal Reserve. As the lender of last resort, the Fed can bailout the unsound banks, removing risk from the system and forcing all the banks to adopt the same deposit reserve ratio if they are to remain competitive.
When the Fed was created, the American people were told that the Fed would protect them from the economic mayhem caused by an unregulated banking system. The truth is that the Fed was created to protect the big banks (J.P. Morgan and John D. Rockefeller were key figures in the Fed's creation).
In the free market, risk mitigates greed. The Fed has removed the risk from the banks and placed it on the American people.
The Fed is already responsible for regulating:
- Bank holding companies
- State-chartered banks
- Foreign branches of member banks
- Edge and agreement corporations
- U.S. state-licensed branches, agencies, and representative offices of foreign banks
- Nonbanking activities of foreign banks
- National banks
- Savings banks
- Nonbank subsidiaries of bank holding companies
- Thrift holding companies
- Financial reporting procedures
- Accounting policies of banks
- Business "continuity" in case of economic emergencies
- Consumer protection laws
- Securities dealings of banks
- Information technology used by banks
- Foreign investment by banks
- Foreign lending by banks
- Branch banking
- Bank mergers and acquisitions
- Who may own a bank
- Capital "adequacy standards"
- Extensions of credit for the purchase of securities
- Equal opportunity lending
- Mortgage disclosure information
- Reserve requirements
- Electronic funds transfers
- Interbank liabilities
- Community Reinvestment Act sub-prime lending demands
- All international banking operations
- Consumer leasing
- Privacy of consumer financial information
- Payments on demand deposits
- "Fair Credit" reporting
- Transactions between member banks and their affiliates
- Truth in lending
- Truth in savings
Posted by Citizen X at 5/9/2009 7:58 PM 
Categories: Federal Reserve,Economy,Obama
Tags: Central Banking Bailouts Obama Fractional Reserve Banking Regulator Fed Free Banking Inflation
Categories: Federal Reserve,Economy,Obama
Tags: Central Banking Bailouts Obama Fractional Reserve Banking Regulator Fed Free Banking Inflation
Yes, the Fed has failed miserably in it's supposed mission to ensure the health of the US economy and financial markets (and not for the first time since its inception). But it's increasingly clear now that the real mission of the Fed is something entirely different, and they've succeeded rather well at that. It's also increasingly clear who's side Obama is on. After all, he was instrumental in pushing the Banker Bailout bill through against the will of the vast majority of American citizens.
There may be nothing more important to the future of the US than stopping the Fed. Although Ron Paul's latest bill to abolish the Fed, HR 833, is sitting idle with no co-sponsors, his bill to audit the Fed, HR 1207, currently has 147 co-sponsors. That's a start, but this effort needs all the support and activism it can get. Check out the End the Fed network.
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Ron Paul's bill to audit the Fed HR 1207 now has 179 cosponsors. It has reached critical mass and is very likely to get out of committee and be heard on the floor of the House. Now's the time to step up the pressure on your representative. Click the link to find out if your rep is a cosponsor.
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A growing number of people are realizing that the Fed has to go if there's going to be any chance of restoring our Constitutional Republic. They believe that if the preliminary step of exposing the Fed through HR 1207 is successful, citizens will then support the abolishment of the Fed (HR 833).
According to Bob Chapman (The International Forecaster), 80% of the public supports this bill and have put tremendous pressure on their representatives, so that now there are 224 co-sponsors (out of a total of 435 representatives) thus virtually assuring its eventual passage. Bob had a part in bringing this about, giving upwards of 30 interviews per week lately, including on major networks.
The "money masters" are finally losing their air of invincibility. They no longer look so smug. They have hired former Enron lobbyist Linda Robertson to "improve their image". It is believed they will focus their influence on defeating the companion bill in the Senate S 604, introduced by Bernie Sanders of Vermont. S 604 currently has only one co-sponsor.
You know what to do!
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Well ya it's greed and power, robbing companies and people, to make themself rich, such as the rockerfellas, Jp morgans make them rich. Making the fed stronger will be more greed, so they can get more richier, thats been going on for a coons age. The reason why other banks do better then unsound banks, cause they have higher interests for loaners gypping them off, thats called inflation higher fees and interests. The thing is the banks give you high rip off interest rates, and the loaners can't afford to pay it, then the banks will be in trouble, thats for unsound banks, that why these unsound banks go belly up, cause they can't afford to pay there depositers, so the bigger banks comes in to play and helps these troubled banks, so it can be even with the banks that give them a lending hand. In essences.. Banks don't wanna Compete with one and other, cause they don't wanna lose money. It's called GREED.. Since the government owns the banks it's a ATM for them...
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Great entry, I am 51 years old and I am just now beginning to understand what a monster the Fed is thanks to Citizen X. I continually try to get support for 1207 but my congressman Rep Akin (missouri) has signed on already. If you read this please do what you can where you live.
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[sarcasm]
Not to worry, folks -- the Fed will just print some more, and more, and LOTS more cash, so much that we'll need wheelbarrows to carry it around town. We'll all be RICH!
[/sarcasm]
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