by James D. Veltmeyer, MD
(October 15, 2019) – President Trump’s recent attacks on the Federal Reserve and its interest rate policies have drawn more public attention to the actions of the nation’s shadowy central bank than at any time since the great crash of 2008 or Ron Paul’s campaigns for President a decade ago.
The President is correct in questioning the Fed’s current approach to the economy. Raising interest rates too quickly following a long era of easy money can indeed cause the type of shock that can push a nation into recession. That’s exactly what happened in 2007-08. Then-Fed chairman Alan Greenspan had pursued a low interest rate policy after 9/11, only to tighten rapidly after 2005, quintupling the federal funds rate from 1% to 5.25% in just four years. This contributed mightily to the subsequent mortgage crisis and housing collapse.
We saw such counterproductive actions just decades before. Paul Volcker’s interest rate policies in the late 1970s and early 1980s raised rates to 21%, throwing the U.S. into the worst recession since the Great Depression and greatly complicating Ronald Reagan’s plans to revive the economy. While Volcker did succeed in breaking the back of inflation, he almost destroyed the U.S. economy in the process.
The question the President should be asking is why is one individual ( the Chairman of the Fed ) granted so much power over the nation’s economy. Why is a central bank that is unelected and has never been subjected to an independent audit permitted to exercise such control over the nation’s money supply? This is a question that goes back to the early days of the American Republic.
One of the earliest battles over a central bank was waged between Thomas Jefferson and Alexander Hamilton. Small-government Jeffersonians denounced the idea of surrendering control of the nation’s money to a privately-owned banking monopoly. After all, does not the Constitution confer the power to “coin money and regulate the value thereof” to the people’s elected representatives in the Congress? Nowhere in the Constitution is there mention of a central bank. However, the wealthy ruling elites have always desired a central bank because such a bank gave them a carte blanche to print money at will and lend money to debt-ridden governments at interest. That’s why the Bank of England was established in 1694 and why Lord Rothschild was quoted as saying: “Give me control of a nation’s money and I care not who makes the laws.”
The Hamiltonians won the early skirmish and George Washington reluctantly agreed to charter the First Bank of the United States in 1791. It was authorized for twenty years. Anti-central bank President James Madison – Father of the Constitution—refused to renew it and let it die a well-deserved death. It was resurrected just five years later as the Second Bank of the United States but became so thoroughly corrupted by crony capitalism that Andrew Jackson killed it off permanently in 1832.
The United States remained generally free of the central bank “vipers” ( Jackson’s appellation ) until the creation of the Fed in 1913. Abraham Lincoln refused the bankers’ loansharking terms during the Civil War and financed the war with interest-free United States Notes. After several artificially-created economic “panics” in the post-Civil War era, the Rockefellers, Rothschilds, Morgans, and Warburgs devised a scheme to create a new central bank which they would control but camouflage it in such a way as to imply it was a federal agency. The Federal Reserve most assuredly is not a part of the federal government. It is about as federal as Federal Express. While the President may appoint its Board of Governors, the regional Federal Reserve banks are privately-owned.
Since the Fed was created, the dollar has lost about 97% of its value. The National Debt has skyrocketed from $3 billion to $22 trillion. Interest payments on the Debt alone are more than the entire Federal Budget when Jimmy Carter was in the White House. Our economy has been locked in a “boom-bust” cycle involving either inflation or deflation, prosperity or recession – all as a result of money being created out of thin air to fund welfare and wars and the price-fixing of interest rate manipulation. The Fed presided over ( and some argue caused ) the Great Depression followed by a series of smaller recessions, the hyperinflation of the 1970s, the dot.com bust of 2000, and the Crash of 2008. A great record for an institution set up to stabilize the nation’s financial system! It’s probably safe to say that the first ten individuals in the Cincinnati telephone directory could have done a better job managing the nation’s economy than the so-called financial “geniuses” at the Fed.
Of course, what business does any individual or institution have in managing a free market economy? A free market economy is managed by millions of producers and consumers who interact on a daily basis, not the President, the Treasury Secretary, faceless bureaucrats, or central bankers.
If President Trump wants to get to the bottom of the money-printing and money-lending scam that is the Federal Reserve System, he should work for passage of Sen. Rand Paul’s legislation to Audit the Fed. It’s time to rip the mask off America’s most secretive, unaccountable, and unconstitutional body, a racket developed and designed to benefit the wealthy elites and ruling class while impoverishing the middle and working classes by destroying the value of their hard-earned dollars. He should then act decisively to begin the process of repealing the Federal Reserve Act of 1913, restoring full convertibility of the dollar to gold, and transferring authority to “coin money and regulate the value thereof” back to the people.
Dr. James Veltmeyer is a prominent La Jolla physician voted “Top Doctor” in San Diego County in 2012, 2014, 2016, 2017 and 2019. Dr. Veltmeyer can be reached at email@example.com