from:alt.conspiracy As, always, Caveat Lector Om K ----- Click Here: <A HREF="aol://5863:126/alt.conspiracy:638828">U.S. Fractional Reserve System, its origin and purposes</A> ----- Subject: U.S. Fractional Reserve System, its origin and purposes From: DickEastman <A HREF="mailto:[EMAIL PROTECTED]">[EMAIL PROTECTED]</ A> Date: Mon, Aug 28, 2000 10:19 AM Message-id: <[EMAIL PROTECTED]> Mark Lau wrote on 8/10/00: > I am wondering if any one could briefly describe the benefits of the > fractional reserve system. The material I have read so far all describe how > it works but not why it is used. Even url's to appropriate sites will be > more than sufficient. > > Thanks in advance. > > Regards, > > mark. > > I am the only one on this newsgroup who has actually taught Money and Banking as a 400-level course to economics majors in their senior year--or if I am not I am the only one who made sure that he really fully understood his subject matter. There are two sets of reasons for the fractional reserve banking system. The first reason was for the lobbying effort to get the legislation past in 1913. The system's backers, specifically Paul Warburg, a Rothschild agent who came to the U.S. specifically to "Europeanize" American banking, sold the system during a time of populist-progressive rebellion (similar to Buchanan and Nader today). The (false) promise was that there would be a system that would provide for a "flexible money supply" that would grow with the economy, rather than being left to such factors as 1) new gold and silver finds, 2) panic hoarding, 3) inside manipulation by the super rich in order to capture a nation's assets from the common people. The plan was to have 12 different Federal Reserve Banks each determining the money supply for its own region. THe heads of the Federal Reserve Banks were called "Governors." The original plan was also for the money supply to be flexible through the increase or decrease of the reserve requirement of member banks, i.e., a change in the amount of assets member banks must hold at all time to cover their loans. The plan was that when there was a recession in a region, the "independent" Region's Federal Reserve Bank would reduce the amount of reserves required so that local bank's would have more "excess" funds that qualified for making small- business loans. None of this is how the bank actually worked and none of it has anything to do with the Federal Reserve Systems actual reason for being. First off, the main means of "expanding" and "contracting" the money supply (and controlling interest rates,the price of loanable funds) almost immediately became "OPEN MARKET OPERATIONS" conducted by the New York Federal Reserve Bank, and that Bank alone!!! The NY Fed. Res. Bank's open market committee was a very cozy market, made in the oak-paneled rooms of the Fed by no more than 10 major bankers and bond dealers. And in practice these powerful bankers, brokers and dealers told the open-market committee how many government securities it would buy or sell. In an "Open Market Purchase" the Fed purchases the gov't securities the bankers choose to sell and at the "market price" of a "market" that is made right on the spot (and always in the interests of the bankers and brokers and their friends). This open market purchase will take money out of economic loop (tightening the money supply) and add bonds, increasing the supply of bonds (bonds are the government's IOU's) that investors may buy in the secondary markets. BUT THE BANKING ELITE PREFERS OPEN MARKET SALES TO OPEN MARKET PURCHASES--an open market sale is when the Fed sells its outstanding securities in exchange for cash, draining off the M1 money supply in circulation. Increasing open market sales over open market purchases is what really happens when the Fed sets a course of the "high-interest rate" policies, as it is doing right now. High interdest-rates mean a reduction in the supply of money for the middle classes. High interest rates mean that the M1 money supply of the middle class has been shrunk by the New York Fed's open market sale You will not that Greenspan is really a powerless non-entity--just like your President and Congressman. The flow of power actually is almost the reverse of the public's understanding. It is the regulated financial powers that are in charge and the supposed "regulators" of the money supply who passively take orders at the expense of nation and public. (And the reason I am a Blockbuster clerk today, is that I discovered this and dared to teach it--think long and hard before you decide to agree with me in public.) After the stock market crash (which the Fed did not prevent) and the Great Depression (which the Fed could have but did not cure) the Fed was reorganized. The regional Governors were no longer to be called "governors" --rather the appointed and unaccountable men and women appointed by rich men, stooges and cronies--so that the Fed was now a centralized command structure designed to do the rich-man's bidding-- and all centralization of Wall Street favors the money powers. Now the fractional reserve system has great power due to the "money multiplier effect." This allows the a relatively small open market sale to influence the entire economy. I will tell you more (or anyone) if you want to hear it. (Right now I must fix the plug on the clothes dryer which is smoking, and my brother is up from Los Angeles to help paint our 80-year old mother's house. But if you want more I'll make an expert out of you. (Or if you are in the Seattle area, come to Yakima and help me paint as I explain it all to you in person (bring a dry erase board for the equations and diagrams) --sounds like a fair exchange to me. Dick Eastman Yakima U.S.A. Every man is responsible to every other man. ----- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, All My Relations. Omnia Bona Bonis, Adieu, Adios, Aloha. Amen. Roads End <A HREF="http://www.ctrl.org/">www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are unwelcomed. Substance�not soap-boxing�please! These are sordid matters and 'conspiracy theory'�with its many half-truths, mis- directions and outright frauds�is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. That being said, CTRLgives no endorsement to the validity of posts, and always suggests to readers; be wary of what you read. 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