Why the “End the Fed” cause is bad for Occupy Wall Street

What has taken place around the country over the past 3 weeks is extraordinary. Americans are waking up to what this country has become over the past few decades. There are many signs, chants and causes one can see and hear at Zuccotti Park. Some of these causes are specific. Some of them are things I have not thought about. But it is heartening to see people of all stripes come out and take a stand for what they believe.  However, there is one particular cause I have been familiar with for years that is downright threatening to OWS:  the crusade to end the Federal Reserve. This does not mean that I am a fan of the Fed or think Alan Greenspan and Ben Bernanke should wield the type of power they do. The Fed has had a major hand in our financial crisis. But the kids who are out chanting “End the Fed” do not know the Trojan Horse of an idea they are embracing. Hopefully, the following analysis will put the “End the Fed” cause into context.

The internet has been the major media outlet in getting the message of OWS out. But well before OWS, the internet has been a haven of counter-cultural values. All of these values are on display at OWS now, but they have been on the internet for years. This includes a healthy number of websites dedicated to theories of lizard people running the world, the Illuminati, Bush planning 9/11 and the idea that the Federal Reserve (established 1913) is responsible for all the poverty and oppression we have now.  Their talking points can be summarized turgidly as follows: in 1913, President Woodrow Wilson created the Federal Reserve, which puts fiscal policy in the hands of a few bankers. Those bankers are anonymous and private, effectively giving them control of monetary policy in the U.S. They have used this power to print money, which causes inflation. Going off the gold standard in the 1970s  gave more power to the Fed to play games with a free-floating currency. Therefore, we must “End the Fed” because it is a “private” bank and go back on the gold standard so bankers will not be able to control the country’s monetary policy. There are variants of this theory making their rounds on the internet but, basically, that is the argument.

Many “End the Fed” types blame central banking on wild business cycles. However, we had wild business cycles before the Fed. The second largest economic depression in U.S. history was in 1893, when there was NO central bank in the U.S.  The United States went into a “Panic” (what they called depression in the 1800s) under President Van Buren, who was in office after Andrew Jackson had killed the Second Bank of the U.S. These facts alone should show that business cycles are not the work of central banking.

Another favorite talking point is that our currency is “fiat”, meaning it only has value because the government says it does. This is code for “our money is really only worth the paper it is printed on”. We should go back on the gold standard so our currency has some real value.  There are many problems with this argument. First, ALL money is fiat, whether it is backed by gold or not. Saying you want the gold standard back is just saying you want the government to say that gold has value as a currency again. You really have no problem with fiat money. You just want the government to make gold fiat as well as paper. Second, our money is not worthless. It is backed by the productive capacity of the U.S. economy. Essentially, American paper money has value as long as there is enough collective faith that America will continue to produce things when we wake up tomorrow. This would be the same exact state of affairs with a gold standard. If America’s economy falls apart, gold will be worthless as well. What good is your gold if there are no stores or factories in which to use it?

Finally, there is the argument that the Fed is responsible for the high rate of  inflation we have seen recently. The “End the Fed” argument basically says the Fed just prints money which causes inflation. This is only half true.  The Fed has in fact printed more and more money and this has caused inflation. But why have they done this? Listening to “End the Fed” partisans, you would think it is out of sheer malice and a desire to enslave the people. However, the Fed has been printing money to cover our mounting national debt, a debt that has been mostly incurred under two Republican Presidents: Ronald Reagan and George W.  Bush. It is our debt that has caused inflation. The Fed is just trying to keep up with the dizzying pace at which our debt has increased.

The reason for our most recent bouts of inflation have been due to rising oil prices, among other things. This is interesting, since there has been no shortage of oil nor any increased demand for oil. The reason we are all paying more for oil is because of speculation. The commodities market was largely deregulated under Bush 43, allowing firms like Goldman-Sachs to dump tons of money into oil futures. This is the very same argument Matt Taibbi makes in his book Griftopia. Blaming the Fed exclusively for inflation allows Wall Street off the hook and acts as a block to seeing how entire high finance’s grip on the economy is.

The question is, if people with a basic knowledge of American history know this, why doesn’t the “End the Fed” crowd know? Because, instead of reading Gordon Wood, H.W. Brands or other legitimate historians, they listen to Congressman Ron Paul and radio show host Alex Jones. Those guys interpret history for their followers. The gist of the Alex Jones (who used to be an aspiring Rush Limbaugh, right-wing politics and all) zeitgeist is that Jews have always controlled the world and the Fed is “secret” and “private” because Jewish bankers are pulling the strings (like the Rothschild family, a familiar target of the “End the Fed” crowd). Jewish control also explains why American foreign policy has protected Israel. However, if these young people knew just a little history, they would know this is just another incarnation of an old idea that has been used to persecute Jews in the past. The Spanish Inquisition accused Jews of eating babies behind closed doors, Alfred Dreyfus in France was falsely accused of being a traitor to his county in the late 1800s and Hitler blamed the Jews for the Great Depression. Jews are stereotyped as cheats, shysters, money-grubbing, scheming and downright evil. They have been stereotyped as such from the start. Egyptian and Babylonian slavery, The Inquisition, pogroms and the Holocaust should be enough evidence for these people that the Jews in fact have not controlled the world behind closed doors.

The Fed is, in fact, a quasi-government institution. It goes like this: the Constitution gives Congress the power to print and coin money. The Congress has tinkered with various methods of doing this throughout history. In 1913, Congress passed the Federal Reserve Act which established the Federal Reserve, a central bank consisting of many member banks, mostly private. You can think of it as Congress outsourcing their Constitutional power to print money to the Federal Reserve. By lending member banks cash at the discount window, the Fed pumps money into the economy. And, yes, many times it does print money. At the same time, it sets interest rates. Conventionally, the Fed raises interest rates when they want to slow the economy down and lowers them when they want to stimulate it. Alan Greenspan was notorious for keeping interests rates low, giving banks further incentive to speculate. But Greenspan, and every other Fed chairman, is appointed by the President and approved by Congress. And many times, when the Fed has printed money, it has been to keep pace with the soaring national debt. So, the Fed is not totally private.

However, there is an argument to be made for the Fed being more transparent, especially after finding out current Fed chair, Ben Bernanke, gave out $1.2 trillion in secret loans to Wall Street.

But to assert that the Fed is private is really code for “those Jews are pulling the strings”. Jews are part of the 99%, not the 1%. Many Jews are at Zuccotti Park and know the problems we face as a nation. Sooner or later, these “End the Fed” youngsters are going to show their true, anti-Semitic colors and it will put a major black eye on OWS. The media will jump all over it and paint everyone protesting as a Jew hater.

Our problems run much deeper than the Fed. Over the past 35 years, Americans have been working longer hours for less money, CEOs are making 400 times what their employees make, financial services have gone from 5 to 35 percent of our total economy, the media has fallen into the hands of 4 companies, the prison population has quintupled, the public sector has been privatized, unions have been broken and we find ourselves in a “War on Terror” that has destroyed our rights and the lives of people around the world. If you think all of these problems are the work of the Fed, you’re too simple to take seriously. But, the fear is that the media will take them seriously and push every other concern into oblivion again. We have worked so hard to get some attention on the injustice that pervades this nation, do not throw it away on single-minded opinions propagated by REPUBLICANS especially, but ignorant people in general.

Please check the follow-up to this post: “End the Fed” (addendum)

12 responses to “Why the “End the Fed” cause is bad for Occupy Wall Street

  1. Two of the biggest critics and proponents of ending the Federal Reserve System on the National scene are Ralph Nader and Dennis Kucinich, far from right wing extremists. It should not be the bench mark of the movement but it should be part of the discussion. In order to really change the way the system operates in a revolutionary way, not just through reforms, is to take back control of monetary policy.

    • Ralph Nader does NOT believe in abolishing the Federal Reserve. He believes in making it more accountable and I completely agree with him. Dennis Kucinich does NOT believe in abolishing the Federal Reserve either, he believes in making it fully public. My article is aimed at the people who have a problem with central banking, period. I agree with Nader and Kucinich. They do not whitewash history to make it seem as if the Fed is the root of all of our problems.

  2. more accountable and transparent, two things it is not in it’s current form.

  3. This is astute criticism… but you’ve taken it too far. Most of the “End the Fed” people, particularly the young ones, don’t have an anti-Semitic bone in their body. While it is certainly fair to point out that we are not as well informed about the history of banking, nor economics in general, as we should be, you are grossly mistaken to think that most who oppose a secretive, quasi-public central bank hate Jews. I agree with everything you say in this article, except for that point, and while I will not deny that there are plenty of people who believe in a Zionist banking conspiracy, the people who solely focus on ending or reforming the Fed by and large do not fit this description. Please make an honest effort to educate people without resorting to such ludicrous assumptions or your otherwise sound argument will not reach your intended audience.

    • Well, I have spoken with scores of End the Fed people for years over the internet and most recently at Zuccotti Park. I know that many of them do have anti-Semitic bones in their bodies, several anti-Semitic bones. In some cases, the anti-Semitism is blatant. In other cases, the anti-Semitism is delivered in dog whistle speech. These are the people who make End the Fed a pet cause. They range from Ron Paul supporters to Alex Jones fans to other general conspiratorial people. Not all conspiracy theories are tinged with anti-Semitism but some of them are. And there is heavy overlap between End the Fed people and anti-Semitism.

      Reforming the Fed is a totally different issue and a more than legitimate starting point for discussion.

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  5. Why is it that when anyone questions the Federal Bank they are “anti-semetic”? Yet when a Zionist crushes a Palestinians house or makes a racist black, hispanic, Catholic, Asian stereotype in the media they call it comedy? You talk about history but during the civil war the South was funded by the Rothchild’s who have the biggest stake in the Federal Reserve. http://www.youtube.com/watch?v=jUGVPBO9_cA

    • Questioning the Federal Reserve bank is fine, there is a lot of questioning of the Fed in this post to which you responded. Doing what you’re doing right here, saying something as misinformed as “the South was funded by the Rothchild’s”, is pure ignorance. It just proves that End the Fed people generally know nothing of history outside of propaganda videos on youtube. If you don’t see the anti-Semitism in what you just said (and I doubt that you do), allow me to explain it to you.

      Read a book and you will discover that Britain was itching for a chance to get involved in the Civil War on the side of the south. American cotton had been supplying British textile factories for decades. The Industrial Revolution in Britain was fueled by American cotton. During the Civil War, Robert E. Lee fought at Antietam and Gettysburg partially out of a desire to win a decisive victory in order to get the support of Britain. His losses in both of these battles convinced Britain that Lee and the South were not the winning horses in the race, so they decided to remain nominally neutral. But Britain was helping the south with everything short of troops, including MONEY from their own central bank, of which I am sure the Rothschild family were a major part.

      So when you say something like the “Rothschilds” funded the south, it is like collapsing a whole bunch of historical circumstances into the capsule of the Rothschilds. It is the stock in trade of all types of conspiracy videos and websites. The implication is that the “Jews” are behind it all. Going by what you say, one would think these Jewish Rothchilds were acting alone because they wanted to keep slavery. This seems to be what you believed. I feel bad for you guys, so hopelessly brainwashed by the internet, so complicit in your own ignorance.

  6. Personally, I feel that “end the Fed” is kind of a red herring. Inequalities of wealth were way worse under the gold standard then they were in the latter half of the 20th century, for example. As well, money monopolies existed before the Fed and will exist after (as centralized currency serves the interests of the ruling class).

  7. Hi Assailedteacher,

    I’d like to right a couple of wrongs for you: every single market crash is intentional. The crash post Jackson was bank-initiated to punish Jackson for eliminating the central bank. If I recall, it revolved heavily around counterfeiting, but I haven’t taken the time to resharpen my brain about this issue. What is clear is that every crash since the first market crash in the U.S. was initiated by the Rothschild family after the War of 1812 has been intentional, and designed to generate ungodly wealth for insiders to the detriment of all others. It was an economic punishment initiated because Thomas Jefferson, then president, refused to renew the central bank’s charter, as he’d fundamentally disagreed with Hamilton about its creation. It also conveniently allowed Rothschild agents such as Carnegie and Rockefeller to become the nation’s first millionaires (and they’ve never looked back).

    Additionally, the Rothschilds did fund the South in the civil war. The reason the civil war merits mention in this context is that it was the first American war where BOTH SIDES were not funded by the Rothschild banking cartel. Who do you think supplies the money for all those guns and supplies? Banks do, and they’re loans.

    Additionally, the Fed does not create money out of thin air, lie, cheat, and swindle to keep it secret, with zero Federal oversight, all while devaluing the money in YOUR pocket that you ACTUALLY WORKED to earn.

    Additionally, there is an ENORMOUS rift in the Jewish community between Zionists and others. Painting with a broad brush and saying “Jew” does a grave disservice to the nuance of the discussion, and since you consider yourself a teacher I find this gravely disappointing. Do you know what Hitler’s party was called before it was called the Nazi’s? It was the National Socialist party. How did it become the Nazis? Because they allied with ZIONISTS. NA – National Socialist. ZI – Zionist. I’d desperately pray that you know that Zionists believe that the coming of their prophet can be forced by invading and homogonozing Jerusalem. They’re the ones maintaining that solar panels that offer some in Gaza their first electricity ever should be destroyed just because. The Jews are the ones arguing in parliament every day (funny how you don’t see the innerworkings of Israeli parliament anywhere, and have to dig pretty deep to find it) that the Jewish people have no interest in genocide and/or dislocation of indigenous Palestinians.

    In short, the Holocaust was supported by some Jews, the Zionists, aimed at oppressing other Jews because they weren’t hardcore enough. I’m glad you’ve given great thought to such issues before frothing at the mouth about them. The Rothschilds are Zionists, which is basically Jewish in name only, and their objectives are wholly separate from the well being of the Jewish people.

    Finally, you really lost me with this:

    “However, the Fed has been printing money to cover our mounting national debt, a debt that has been mostly incurred under two Republican Presidents: Ronald Reagan and George W. Bush. It is our debt that has caused inflation. The Fed is just trying to keep up with the dizzying pace at which our debt has increased.”

    There’s a pretty important secret that you obviously haven’t learned yet: Money IS debt. ALL money is debt, the size of our money supply parallels the size of our national debt completely. That money in your pocket is accruing interest, and the more money is printed, the more debt exists. That’s 100% how it works, how it was designed to work. It’s why if you watch the HBO miniseries John Adams you have Alexander Hamilton saying, “We need to start a national bank and take on a national debt.” Without that national debt, you have no money. Every single dollar in a central-bank controlled economy is a dollar of debt, and the national debt can and will never be paid off until you are willing to eliminate every single dollar from circulation.

    Even if you did eliminate every single dollar from circulation, you wouldn’t eliminate all the debt! Why? Because, as I said, every single dollar that exists is accruing interest. When The Fed prints a dollar, by the year the U.S. Government owed more than that one dollar back to the Fed. But only one dollar was created, meaning the Fed isn’t only creating a dollar when it prints one; it’s creating the interest as well, which is a deficit that cannot be overcome- after all, how can you pay $1.03 when only $1 exists?

    You need to do some serious research, and I’m sure you’re going to reject my claims out of hand instead of seeing this as the Road to Damascus moment I desperately need you to experience. You are powerful, you are intelligent, and you are a good writer. Your failure is one of research, and I hope that you will overcome it in time. The #1 way to understand this better would be to watch The Secret of Oz. It’s made by a fairly dry but extremely intelligent, articulate, and non anti-Semitic man named Bill Still, who has an encyclopedic knowledge of recorded monetary history. Spoiler Alert: The film explains how the story of the Wizard of Oz is actually an economic critique from the time, the meaning of which was largely lost in the film version, when Dorothy’s slippers were turned Ruby to showcase the invention of Technicolor. Her slippers in the book? Silver!

    Watch the Secret of Oz (It is a full-length feature film which won Best Documentary of 2010 at BIFF -Beloit International Film Festival, but you can watch it in increments. The only thing I ask is that you actually give it a try; this isn’t CT shill, I am not wearing a tinfoil hat, and I believe you’re going to find it immensely engaging. Try 15 minutes of it and see where you stand): http://www.youtube.com/watch?v=swkq2E8mswI

    • Matt, you have schooled the teacher with your comments, and you have saved me from making a long post myself. I would like to know if, in the intervening time between your post and mine, if the teacher has become more informed and understands the situation and the history of the issuance of money any better. It’s not monetary policy, but who issues the money, that they issue it (create money “out of thin air”) with interest, that the government issues debt with interest instead of just printing the money, are the main points that the teacher has overlooked.

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