How the Federal Reserve was Born – Part II

Even prior to the passage of the Federal Reserve Act in 1913, banks were allowed to issue more promises to pay than they had in their vaults. In fact, they didn’t issue just a little bit more promises to pay than the money they had in the vault. They issued a lot more promises to pay than money in the vault by a factor of 300 to 1. If every depositor were to request his or her money back at the same time, the bank would most certainly go under. This was called a “run on the bank.” A “currency … Continue reading

A Primer in Currency Manipulation

You may have heard that various currencies have been “pegged” to another currency. You may have wondered what that means. The Chinese Yuan is pegged to the US Dollar. Hong Kong, Belize, the Bahamas, Barbados and a number of other countries also peg their currencies to the US dollar. This does not mean that they have a 1:1 ratio (i.e. one US dollar is not equal to one Hong Kong dollar). It simply means that there is a fixed exchange rate between the two currencies; it does not fluctuate freely.   Switzerland pegged the Swiss franc to the euro in … Continue reading

How the Federal Reserve was born

The Federal Reserve is not a part of the government of the United States. It is a privately owned enterprise. The book, “The Creature from Jekyll Island,” by G. Edward Griffin, is about how the central bank we know as the Federal Reserve (the Fed, for short) was formed, what was behind it, and what effect it has on our lives today. I have the edition from June 2005. I’m sure more recent editions have some very gloomy, yet exciting chapters at the end, where the author describes what will happen to our economy if monetary and fiscal policies continue … Continue reading