Tell me again, why shouldnt we abolish the Federal Reserve?

Question

It is important to understand that the FED does not actually print money, All U.S. currency is in fact printed by the Bureau of Engraving and Printing (BEP). The Fed, rather is the master distributor of the money, which they "create" this way by executing a simple computer entry in their accounting system.

Despite what many people think, the Federal reserve is NOT an agency of the United States government.
They are no more a part of the Federal government than is Federal Express. The Federal Reserve is actually a privately owned corporation, owned by a secret group of international bankers. In essence, they are a private banking cartel who have a total monopoly on "creating" money for the U.S. government. The Fed's only real agenda is to turn a profit and they do so at the expense of every single man, woman and child living in the U.S.A..

If you ask the average person you meet on the street, What is the Fed ? and What do they do ? Most (if they have any idea at all) will say they think the Fed is an agency of the U.S. government, and that they serve to help stabilize our economy by controlling interest rates and providing liquidity when needed. 

Nothing could be further from the truth. They really have 1 agenda and 1 agenda only . . . that is to turn a profit. 

They do this in 2 different ways: 

They manipulate interest rates to create "boom-bust" cycles which always work out to the advantage of the hidden elite "insiders". . . 
as they know exactly when our economy will boom, and when it will bust. 

They increase the money supply by "creating" money through the incredibly lucrative "sweet heart" deal 
they've had with the U.S. government, ever since the Federal Reserve Act of 1913 was signed into law. 
Accordingly, when the U.S. Government needs money, they go to the Fed to borrow the money. The Fed calls the Treasury and asks them to print x amount of Federal Reserve Notes (FRN) in units of one hundred dollars. The Treasury charges the Fed 2.3 cents for each note. The Fed then lends that money to the government at face value plus interest. The government has to create a bond for the loan amount as security for the loan. 
Now the government owes the private ownership of the Fed the face value of the bonds plus interest. In other words, the Fed earns interest by "loaning" that money to the U.S. government. Imagine that... they earn interest by loaning money which is not even theirs to loan...
which they just created out of thin air.

So essentially every bill they "create" has a debt associated to it, and if the debt is not paid, what do you think they do ? 
That's right. They create more Federal Reserve Notes so they can loan more to the government (actually exchange for U.S. bonds)
in order to pay off the debt, thereby growing the national debt even more. 

This is what we refer to as a debt monetary system. In other words, our currency has a debt attached to it before we ever spend any of it. We can never get out of debt because it is a self propagating, vicious cycle, that will ultimately end with the complete destruction of our currency and bankruptcy of our nation.

They can NOT be audited and do NOT answer to the President or anyone for that matter. The president appoints the Board of Governors but has no control over their secret activities. Congress knows nothing of the conversations, plans, and actions taken in concert with other central banks. We get less and less information regarding the money supply each year, especially now that M3 is no longer reported. 

Not only is the Fed exempt from tax, but 100% of the income tax that Americans pay, goes right to the Fed to pay off this debt, which they perpetually create. It is no coincidence that the Federal Income tax law was enacted in the same year as the Federal Reserve Act. It was needed to finance this scam. Prior to this, the U.S prospered and the government paid it's bills with out needing revenue from income tax. But that all ended with the enactment of the Federal Reserve Act of 1913. From that point forward, income tax was required to pay for the debt owed to the Fed for interest on the money they create and loan out to the U.S. government. This is just beyond insanity.

"I believe that banking institutions are more dangerous to our liberties that standing armies"
-Thomas Jefferson

In accordance with Thomas Jefferson's views, Article 1, Section 8 of the US Constitution specifically says that Congress is the only body that can "coin money and regulate the value thereof." The US Constitution has never been amended to allow anyone other than Congress to coin and regulate currency.

NGC6205 · Accepted Answer

Geez, so much nonsense.

The U.S. shouldn't do away with the Federal Reserve because all modern economies NEED a central bank in order to operate efficiently.

The Federal Reserve is INDEPENDENT, but it is most definitely NOT private. There are parts of the Federal Reserve System that can be considered private IN CERTAIN SITUATIONS, but for the most part, it is not private and is properly held to be a federal instrumentality. See my answer at http://answers.yahoo.com/question/index;_ylt=AsNV3j7Zw9Y248x634H8mNnty6IX;_ylv=3?qid=20120409025445AAIUD74 for more information about the structure and ownership of the Federal Reserve. That link includes links to the law governing the Federal Reserve. Anything that disagrees with the law, like claims that the Fed is owned by a secret group of international bankers, is obviously conspiracy theory nonsense.

Also mentioned in the prior link is that the Fed is definitely NOT a for profit bank or system. In fact, after a small dividend is paid to the member banks of the system and an adjustment to a statutorily authorized surplus fund, all profits are turned over to the U.S. Treasury every year.

Booms and busts are NOT created by the Federal Reserve either, at least not on purpose. An active economy will have booms and busts even when no central bank exists. In fact, there were more recessions and depressions in the 1800s and they usually lasted longer than there have been since the Federal Reserve was created.

You are also wrong about how the government borrows money. The government borrows money by issuing U.S. Treasury securities which are then sold at auction where anyone may buy them, even you. However, the Federal Reserve is FORBIDDEN BY LAW from loaning money to the government directly. Most U.S. Treasury securities are issued with a maturity date and the government will NOT redeem or pay back the security until the maturity date is reached. If a holder wants to get their money for the security before the maturity date, they have to find another investor willing to buy it from them. This buying and selling of securities after issue but before maturity creates the open market. It is on the open market that the Federal Reserve purchases the U.S. Treasury securities that it holds. The rest of your description about how the Fed operates concerning money is also nonsense.

Contrary to conspiracy theory nonsense, the Federal Reserve is audited every year. Annual independent audits are required by law. See 12 USC 248b The results of those audits are public record and are included in the Federal Reserve's annual report to Congress.

It is also a MYTH that all of the income tax goes to the Federal Reserve to pay off the debt. That myth came about because some conspiracy theorists with reading comprehension problems misinterpreted the Grace Commission report. The Grace Commission report, which dates from the mid-80s when the interest rate on the debt was much higher, stated that 1/3 of income taxes due were not collected, 1/3 was wasted by government bureaucracy, and 1/3 went to interest on the debt. Whatever portion of income taxes go to pay interest on the debt, it goes to the holders of the debt of which the Federal Reserve only holds a portion.

Finally, before I run out of room, your interpretation of the Constitution is FLAWED. While Congress has the power to create money and to regulate its value, it also has the power to make all laws necessary and proper to carry out the powers granted to it. The Supreme Court long ago determined that Congress could charter a bank and authorize that bank to issue circulating notes. That ruling dates back to 1819.

EDIT: The Dodd-Frank Act was responsible for the comprehensive audit performed by the GAO on the extraordinary lending programs. The Dodd-Frank Act also was responsible for REDUCING the independence of the Federal Reserve. During the financial crisis, the Federal Reserve established and operated several extraordinary lending programs to improve liquidity for financial institutions. These were allowed under certain sections of the Federal Reserve Act. The Dodd-Frank Act now requires the Federal Reserve to obtain permission from the Secretary of the Treasury before establishing any extraordinary programs.

Again, contrary to conspiracy theory nonsense, the Federal Reserve is audited by the GAO. However, GAO audits are limited in FOUR areas. Those four areas are listed in 31 USC 714. The purpose of those limitations is to separate monetary policy decisions from constant second-guessing by Congress. While those limitations do apply to GAO audits and reviews, the annual independent audits are not limited in any way. All transactions that the GAO may not review can and have been reviewed in the independent audits.

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Income tax is unconstitutional and illegal. We should not be paying this. End the Fed people, it is ruining this country. How can we print money that is backed by nothing? Limit the government, know where your money you worked for is being appropriated inappropriately.

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We need less government. No income taxes. No big government unless it's the military or laws against sins like gay marriage.

Tell me again, why shouldnt we abolish the Federal Reserve?

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