The FED, the dollar, gold & the petrodollar
By Will Hart
"Our way of life is under attack... the very word "secrecy" is repugnant in a free and open society; and we are as a people inherently and historically opposed to secret societies, to secret oaths and to secret proceedings." (John F Kennedy)
American history over the last 100 years has been dominated by one institution, The Federal Reserve Bank (FED). Interestingly, to this day few Americans know what it really is or exactly what it does. In that regard it is a bit like the National Security Agency, which employees jokingly referred to as No Such Agency, at least prior to Edward Snowden.
The FED conducts its meetings in secret, which is a tradition that goes back to its formation. It ultimately answers to no one, neither congress nor the president. It is not really a federal government agency, it is an imposter. The name was carefully crafted to disguise its true identity in the public mind.
When republican Congressman Ron Paul was running for the presidency in 1988 he told an interviewer, "I could not go to a (FED committee) meeting. I couldn't get an audit..." Though the FED pretends that it is accountable to Congress, without the ability to inspect and audit there is no basis for that bogus claim.
Democratic congressman (also a presidential candidate) Dennis Kucinich echoed Paul's statements while giving a speech on the House floor. He noted: "In 1913 the money power of the country was taken away from the people. By constitutional privledge it belongs with the congress. But it was given up in the Federal Reserve Act. The Federal Reserve is no more federal than Federal Express..."
At this juncture a brief history of the FED is in order.
The concept of a central bank was hatched and discussed, in secret, by a small group of wealthy, powerful bankers, JP Morgan chief among them. They discussed how to draft a bill that could get through congress at a clandestine meeting held at an exclusive hunting club, owned by Morgan, on Jekyll Island, Georgia.
[The date, November 22, 1910. keep that date in mind as it will come into play 53 years later.]
Founding fathers, including Thomas Jefferson and James Madison, believed that a "national bank" was unconstitutional. Knowing that they would face intense opposition in congress the 'group' chose to keep themselves and their scheme out of public view.
There was one non- banker in it, Senator Nelson Aldrich, the father-in-law of John D. Rockefeller Jr. and grandfather of Nelson and David Rockefeller. In fact, Aldrich was the most powerful man in Congress at that time. A member for 40 years, 36 of them in the Senate, he was also Chairman of the powerful Senate Finance Committee.
Aldrich was given the task of getting their national bank bill through congress. His efforts were met with intense opposition from Lindberg. Finally, in a bold stroke he managed to sneakily ram the bill through the day before Christmas Eve when most of congress was absent, back home in their districts to celebrate the holiday.
The day before the Federal Reserve Act passed, Congressman Charles Lindberg Sr. declared:
"The money trust deliberately caused the 1907 money panic and thereby forced Congress to create a National Monetary Commission which led to the ultimate creation of the privately owned Federal Reserve Bank. The Federal Reserve Act establishes the most gigantic monetary trust on earth. When the President signs the bill, the invisible government of the Monetary Powers will be legalized...The worst legislative crime of the ages..."
Lindberg's statement was prophetic and will be echoed decades later as we shall see.
The Federal Reserve Act (CH. 6, 38 Stat. 251, was passed December 23, 1913. Apologists who claim the FED is a government agency need to get the facts straight from the horse's mouth; and the America public, and the rest of the world, should no longer be confused.
In 2009, former FED chairman Alan Greenspan was interviewed on the PBS News Hour by anchor Jim Leherer. He asked, "what should the proper relationship be between the president and the chairman of the Federal Reserve?"
Greenspan replied," The FED is an independent agency...there is no other agency of government which can overrule actions that we take...those relationships don't frankly matter..."
In other words the FED has the sole power and authority to set interest rates, monetary growth targets, print as much money as it wants to, et al., without any input, supervision or real oversight by the president or congress.
The final proof, however, comes from another government source. The below quote is taken from "A Primer on Money", published by the Committee on Banking and Currency, U.S. House of Representatives, 88th Congress, 2d session, August 5, 1964, p. 75:
"The practical effect of requiring all purchases to be made through the open market is to take money from the taxpayer and give it to the dealers. It forces the Government to pay a toll for borrowing money. (Author's underline) There are six 'bank' dealers: First National City Bank of New York; Chemical Crop. Exchange Bank, New York, Morgan Guaranty Trust Co., New York, Bankers Trust of New York, First National Bank of Chicago, and Continental Illinois Bank of Chicago.
Those are all privately held banks. 'Pay a toll means that the FED turns a profit from its operations and that goes to the above banks.
As powerful and potentially dangerous as the early FED was it had nowhere near the absolute power it would posses by the latter part of the 20th century. When it was created the central bank was constrained because the dollar was backed by gold.
They could not print money out of thin air, as they do nonstop today.
The United States moved to a gold standard in 1900, making both gold and silver the legal-tender coinage of the United States, and guaranteed the dollar as convertible to 1.5 g (23.22 grains) of gold..
In early 1933, Congress and President Roosevelt implemented a series of Acts and Executive Orders which suspended the gold standard, except for foreign exchange; revoked gold as universal legal tender for debts; and banned private ownership of significant amounts of gold coin.
Though private citizens could no longer own gold or redeem dollars for it, the dollar was still convertible to gold if foreign nations so desired to redeem their dollars. In essence, those dictatorial acts set the stage for the final act in the fiat money drama that we are so thoroughly trapped in today.
After WWII, foreign countries could still convert their dollars into gold. That made the dollar the de facto global currency. However, that was not officially established until an international conference at Bretton Woods hammered out an agreement. The pact pegged all other currencies to the U.S. dollar; and they were thus still directly linked to the gold standard.
However, in 1971, then President Nixon shocked the world by unilaterally pulling the plug on Bretton Woods. By so doing he unwittingly handed the FED absolute power over the US and global economy. From that point on the Federal Reserve could set interest rates, money supply growth targets, and print money unrestrained by the gold standard, congress or anyone else for that matter.
But there was more to the "Nixon Shock", far more in fact. Nixon and his globalist sidekick, Secretary of State, Henry Kissinger, knew that their destruction of the international gold standard under the Bretton Woods arrangement would cause a decline in the artificial global demand for the U.S. dollar.
Fearing the US would lose its grip on the global economy they devised a scheme. In a series of meetings, Kissinger and the Saudi royal family cut a world- transforming deal, a powerful agreement that kept the dollar as the reserve currency. It would also ratchet the FED's power up to an even higher level.
Today, we refer to it as the petrodollar system. What exactly does that term mean?
In short, the United States offered military protection to Saudi Arabia's oil fields. The U.S. also agreed to provide the Saudis with weapons, and perhaps evem importantly, guaranteed protection from aggressive acts by Israel.
In exchange the Saudis agreed to price all of their oil sales in U.S. dollars only. (In other words, the Saudis could only accept the U.S. dollar, as payment for their oil exports.) In addition, and this goes straight back to the FED, the Saudis also agreed to invest their surplus oil proceeds in U.S. debt securities.
In effect, with a bold stroke the US dollar maintained its reserve status but this time due to oil and geopolitical realities. The world was caught off guard and even US allies were not happy about being snookered. The petrodollar deal effectively trapped the rest of the world into a, de facto, use of the dollar as the global reserve currency.
By 1975, all of the oil-producing nations of OPEC had agreed to price their oil in dollars; and to hold their surplus oil proceeds in U.S. government debt securities, in exchange for deals similar to that offered the Saudis.
From the perspective of American Empire consolidation, this new "dollars for oil" system was much more preferred over the former "dollars for gold" system as its economic requirements were much less stringent. Without the constraints imposed by a rigid gold standard, the U.S. monetary base could be grown at exponential rates.
The banksters scored the final coup! How was the world put into check and trapped by the petrodollar?
In need of dollars to buy oil many countries opted to develop an export-led strategy with the United States; they did this in order to exchange their goods and services for the U.S. dollars required to purchase oil in the global markets.
Now, exactly in how many different ways does the US most benefit from the petrodollar?
In essence, America receives a double loan out of every global oil transaction. First, oil consumers are required to purchase oil in U.S. dollars. Second, the surplus profits of the oil-producing nations are then put into U.S. government debt securities held in Western banks.
The petrodollar system also provides at least three other instant benefits to the United States.
It increases global demand for U.S. dollars
It increases global demand for U.S. debt securities
It gives the United States the ability to buy oil with a currency it can print at will, which the FED has been doing for 6 years.
This essentially puts the FED in the global driver's seat. In addition, it is the reason that America has been able to live beyond its means and rack up trillions of dollars of debt and run massive trade deficits, for decades, all at the same time.
Nixon and Kissinger's unilateral actions were not without consequences however. The price of gold shot up to $850. The world wisely devalued the dollar and in a hurry and has largely been doing so ever since. The US government had controlled the price at $35 an ounce when it was backed up by gold.
As we have seen, from 1972 on the FED has been able to arbitrarily set monetary policy and the results have been disastrous.
In recent years they have actually revealed the true extent of their powers by unleashing 0 interest rates and leaving the printing press button stuck ON, essentially flooding the world with trillions of dollars. The endgame is at hand, the goal... complete global dominion.
At this point we need to go back in the chronology and insert a very important series of events. It is June, 1963 President John F Kennedy signed Executive Order 11110. The order instructed the Treasury Department (not the FED), "to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury."
This meant that for every ounce of silver in the U.S. Treasury's vault, the government could introduce new money into circulation based on the silver bullion physically held there. As a result, more than $4 billion in United States Notes were brought into circulation in $2 and $5 denominations and $10 and $20 notes were due to be released...
Kennedy was trying to set a new precedent and he was giving the FED a message.
Then on, November 22 1963 JFK was shot and killed and those larger notes were never released. Note the date of his assassination, is it really by coincidence that it should occur exactly 53 years to the day of the secret meeting held on Jekyll Island by the plutocrats?
The $10 and $20 certificates were being printed when JFK was killed. Not only were they never released, the smaller denominations were taken out of circulation. In essence, Kennedy was trying to take the reins from the FED and put the power of money back in the Treasury Department.
The message was clear. Who was JFK referring to when he claimed there was a plot to destroy American freedom that citizens needed to become aware of? Years later another war hero Senator Daniel Inoye would also refer to an unelected Government,
"There exists a shadowy Government with its own Air Force, its own Navy, its own fundraising mechanism, and the ability to pursue its own ideas of the national interest, free from all checks and balances, and free from the law itself."
Who is this unseen hand... is that really a mystery? There is only one rogue, private quasi-government agency hiding in plain sight- the FED. Inouye would never answer any further questions about what he knew after making that cryptic statement.
Then we turn to the case of Saddam Hussein who had the temerity to challenge the almighty petrodollar. We know what happened to his country and to him, case closed. Next, came Khaddafi and his African bank, we know what happened to his country and to him, case closed.
Now, we turn to Vladimir Putin and Russia. It ought to be clear now why the Ukraine erupted and why the US -- merely the proxy of the Shadow Government at this late stage -- has closed in on Russia and revived the Cold War?
Mr. Putin is challenging the almighty petrodollar and Russia has the oil to back it up. He is clearly in the crosshairs. The American Empire is not going to give up its stranglehold on the global economy. Forget about all the red- herring issues raised by western propagandists, the conflict is about oil and the petrodollar.
The same holds true for Iran. It is not about an Islamic country coming into possession of nukes, Pakistan has them. The real issue is Iran's ditching of America's key to the golden printing press, insured by the petrodollar. You never hear of Israel threatening to bomb Saudi Arabia, one of the main breeding grounds of Islamic terrorism.
Note that the US has forced its allies to place sanctions on both Russia and Iran. But the Eagle is losing its grip. Now that China is on the scene, in a big way, and cementing ties with both Russia and Iran, the petrodollars days are numbered.
When it dies America is going to face its day of reckoning, which will make the last two financial crashes and recessions look like balloon parties. Then Americans will realize, too late, that the FED has turned them into paupers...
Russia and China should get rid of the dollar dependence