Why Ron Paul doesn't like the Federal Reserve?

As a new Ron Paul writer for the examiner, I'm try to write a few articles that explain the historical knowledge he bases his opinions on. After reading these articles, it will be easier to follow Paul's logic in subsequent articles when he discusses America's economy and world politics.

For the comments on my earlier article, the U. S. Treasury is essentially independent from the Federal Reserve. The Federal Reserve itself is a private entity, not part of the Federal government. After the inception of the Federal Reserve, the functions of the old federal Bureau of Internal Revenue was assimilated by the Federal Reserve and, by 1953, changed its name to te I.R.S. It's not magic or propaganda; it's simply history. If you don't believe me, go look it up. http://en.wikipedia.org/wiki/Internal_Revenue_Service "The Department of the Treasury" is not the same as the "U.S. Treasury." It is just a department of the Federal Reserve.

Ron Paul doesn't like the Federal Reserve because of its use of fiat money instead of the gold standard. If one reads Modern Money Machanics, a book on the Federal Reserve printed by th Federal Reserve, one can learn how the Federal Reserve System is designed to make our money depreciate in value through artificial inflation, which is no different than a tax itself. It is the most insidious tax of all because most people don't even know that their money is losing its real value. Paul wants to reinstate the gold standard, which brings back constitutionally lawful money and eliminates the Federal Reserve's forced inflation, which has been making everyone much poorer since the Federal Reserve was given the keys to the vault that is the U.S.'s economy.

The Federal Reserve
Until the Federal Reserve was established, the U.S., in the tradition of the Bank of England, was in a transition from receipt money to fiat money. The reason for this transition was and is that the creditors of the U.S. claim interest (profit) on their investment. The more indebted the U.S. becomes, the more interest the U.S. must pay in order to exist. America started with principles of commodity money, writing in the Constitution that only gold and silver coinage is valid money. National debts persuaded Congress to illegally ignore the Constitution. When the U.S. wasn’t able to pay off its interest after the Civil War, it agreed to a banking scheme used by the Bank of England: using fractional currency. Using fractional currency is using a partial gold-backing and a partial credit-backing on money. The more the gold-backing is removed, the more credit-backing is created to take its place. The scheme of it is that credit ultimately doesn’t have a true value because there is no substance for it to represent (to back it.) Money that is backed by credit or debt is simply a promise to pay. Meanwhile, the real value America’s money once had, the gold and silver-backing, was given to the creditors as interest on the debt. This plundering gave American currency the trend of diminishing in true value, all the way to having no real value (a.k.a. fiat money.)

Former President James A. Garfield brought to light America’s progressively worse monetary unconstitutionality by stating in his 1881 Inaugural Address:

The chief duty of the National Government in connection with the currency of the country is to coin money and declare its value. Grave doubts have been entertained whether Congress is authorized by the Constitution to make any form of paper money legal tender. The present issue of United States notes has been sustained by the necessities of war; but such paper should depend for its value and currency upon its convenience in use and its prompt redemption in coin at the will of the holder, and not upon its compulsory circulation. These notes are not money, but promises to pay money. If the holders demand it, the promise should be kept.

Four months after giving this Address, Garfield was shot by a purportedly distraught attorney and died two months later.

The Federal Reserve was conceived by seven of the wealthiest men on the planet – together owning a quarter of the entire world’s wealth – in response to the Money Panic of 1907, in which there wasn’t enough money in circulation for the economy to support business as usual. These seven men were: Abraham Piatt Andrew, Assistant Secretary of the United States Treasury; Henry P. Davidson, senior partner of the J.P. Morgan Company; Charles D. Norton, president of J. P. Morgan’s First National Bank of New York; Nelson W. Aldrich, Chairman of the National Monetary Commission, business associate of J. P. Morgan, and father-in-law of John D. Rockefeller, Jr.; Frank A. Vanderlip, president of the National City Bank of New York, representing William Rockefeller and the international investment banking house of Kuhn, Loeb & Company; Benjamin Strong, head of J.P. Morgan’s Bankers Trust Company; and – considered the father of the Federal Reserve – Paul M. Warburg, a partner in Kuhn, Loeb & Company, a representative of the Rothschild banking industry, and brother to Max Warburg, who headed the Warburg banking consortium in the Netherlands and Germany. These men collectively represented the two biggest banking industries in both America – the Morgan and Rockefeller groups – and Europe – the Warburg and Rothschild groups.

In response to the Money Panic, Teddy Roosevelt passed a bill which created the National Monetary Commission and put Nelson W. Aldrich in charge of finding a solution. On November 22, 1910, the seven men met at a train station in Hoboken, NJ and boarded a train headed for Brunswick, GA, their final destination being Jekyll Island. On this trip, they set up plans to create the first American central bank since Andrew Jackson’s time. This central bank was to be composed of twelve regional banks, the locations of which were to be chosen by the government, but most of the directors of these banks were to be privately chosen. Private individuals who profit from the ownership of shares would own this central bank. The President of the United States would appoint the governors of the Federal Reserve Board and the administrators of the twelve banks. Shortly after its conception, the plan for the central bank passed through Congress.

Approving the bank was quite an arduous process for its proponents. Congress wasn’t keen on the idea of erecting a new central bank and renovating American currency. If one reads what went on between its proposal and its edification, one will see that a great reason for its success was rooted in corruption within both Congress and the American Bankers Association (ABA.) Woodrow Wilson, the active President of the time, had the final say regarding the passing of the Federal Reserve Act of 1913. Apparently distraught over what he had done, just before his death he was quoted saying, "I am a most unhappy man. Unwittingly I have ruined my country." Immediately after the Federal Reserve’s edification, the people didn’t trust the bank and its new notes. It wasn’t until after the Great Depression, when Congress forced it down the people’s throats with House/Senate Joint Resolution 192, that the bank became what it was originally planned to be.

Alas, the bankers finished robbing America of its assets and American currency became totally based on debt and the promise to pay later. Just look at your own Federal Reserve Notes. They read: "THIS NOTE IS LEGAL TENDER FOR ALL DEBTS PUBLIC AND PRIVATE" and the cute "IN GOD WE TRUST." "Trust" in this instance refers to its legal definition: trust, n. 1. The right, enforceable solely in equity, to the beneficial enjoyment of property to which another person holds the legal title; a property interest held by one person (the trustee) at the request of another (the settlor) for the benefit of a third party (the beneficiary). The logic of the phrase on the note is that in God – which some say is an all-controlling entity, of which one can only have faith in His existence and cannot prove His existence in a material, concrete fashion – we trust, or hold legal title to at the request of the Federal Reserve for the benefit of who you transfer the note to; and the note represents a chunk of all of America’s combined property – America’s wealth, in the form of all types of goods and services that can be considered something of value. Maintaining this legal context, the Federal Reserve could reprint their notes to read: At our command, you shall transfer this monetary fiction amongst each other.

If all bank loans were paid, no one would have a bank deposit and there would not be a dollar of currency or coin in circulation. This is a staggering thought. We are completely dependent on the commercial banks. Someone has to borrow every dollar we have in circulation – cash or credit. If the banks create ample synthetic money we are prosperous. If not, we starve. We are absolutely without a permanent monetary system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible. But there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it is widely understood and the defects remedied very soon. - Robert H. Hemphil, credit manager, Federal Reserve Bank of Atlanta

The few who can understand the system will either be so interested in its profits or so dependent on it for favors that there will be no opposition from that class. While on the other hand, the great body of people mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint and perhaps without even suspecting that the system is inimical to their interests. - Rothschild Brothers of London