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How the Next Fed Chair Should Transform the American Economy

24 | By Shah Gilani

In a perfect world, the next president of the United States would win by a landslide if they announced they’d nominate Sheila Bair to head up the Federal Reserve and laid out her agenda.

Unfortunately – as we’ve been reminded countless times during this election year – ours is far from a perfect world

For this fantasy of mine to work, the next president would first have to reveal to the public what the Federal Reserve System really is, who really owns it, how it controls the government, how it has thoroughly screwed up the economy and destroyed free markets, and how it threatens our democracy.

Then, he or she would explain why Sheila Bair is the right person to head up the Fed and that her agenda would be to disarm it, dismantle it, and replace it with something altogether new.

Last week, I laid out Sheila Bair’s credentials and why she’s the right person for the job.

Today, I’ll tell you why unwinding and replacing the Fed would transform America – and how the next Federal Reserve chair can make it happen.

Let’s get started…

A Shock to the System

It would come as a shock to 99% of Americans, including most politicians, to learn that the Federal Reserve System, although enacted into law by an act of Congress in 1913, isn’t a branch of government.

They’d be even more shocked to learn that the Federal Reserve, the United States’ central bank, is privately owned, that its stock is 100% owned by banks.

The banking oligarchs that devised and architected the Federal Reserve System in 1910 knew they’d have to cede some semblance of control to the government for their scheme to be approved.

That supposed control by government is the president’s ability to nominate the Board of Governors of the Fed and that they have to be confirmed by the Senate. That’s it – that’s the entire extent of the government’s control over the Fed.

Scary, huh?

When you see the Fed Chair appearing before the House and Senate to give testimony on the state of the economy and what they’re doing about it – it’s nothing more than political theater.

The Honorable Louis McFadden, Chairman of the House Banking and Currency Committee in the 1930s famously said, “Some people think that the Federal Reserve Banks are United States Government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders.”

Here’s What the Fed Really Does, and How It’s Screwed the Economy

So what does the Federal Reserve really do?

Ellen Brown, best-selling author of Web of Debt and The Public Bank Solution explains it perfectly:

The Fed’s mandate was then and continues to be to keep the private banking system intact; and that means keeping intact the system’s most valuable asset, a monopoly on creating the national money supply. Except for coins, every dollar in circulation is now created privately as a debt to the Federal Reserve or the banking system it heads… The Fed’s website attempts to gloss over its role as chief defender and protector of this private banking club.

The Fed controls the U.S. government by controlling Congress. Not directly. mind you. But by the constituent banks that own the Fed and their officers lavishing campaign money on politicians and by their army of exorbitantly paid lobbying firms and influence peddlers directing policy.

How has the Fed screwed up the economy and destroyed free markets?

By artificially manipulating interest rates the Fed engineers booms and inevitable busts that follow excessive profit-making schemes foisted on the public by profiteering banks.

Without the Fed constantly manipulating interest rates, most of the time ratcheting them down to spur bank lending and credit extension, the free market would determine the appropriate level of interest rates commensurate with economic conditions and borrowers’ creditworthiness.

As a result of the Fed’s gross manipulation of interest rates the free market isn’t entirely free to allocate capital and credit according to real-world risk and reward parameters.

While a history of the Fed would reveal serial ineptitude in terms of the Fed managing the economy, we only have to go back to how artificially low rates in the early 2000s spawned the subprime mortgage build-up, massive bets on mortgage-backed securities, the credit crisis, and the Great Recession.

The Fed continuing its low-to-zero interest rate policies to fix the hole its policies dug for the American economy further shackles free markets. It has bankrupted savers and retirees and anyone in the middle class or lower socio economic class from ever being able to retire, to the benefit of wealthy renters of financial assets, which are now in bubble territory once again.

But that’s not all… it’s not just the economy the Fed’s screwed – it’s democracy.

Why We Must Unwind the Fed

Our American democracy has been overthrown by a bunch of banking oligarchs and officers who have turned the U.S. into a kind of banana republic whose economy serves to enrich the oligarchs and officers that control our money supply, credit and future.

Sheila Bair should be installed at the Fed to disarm it by immediately ending its ability to print money to manipulate interest rates.

She should be tasked with dismantling the system of control banksters have over the economy and the country. Dismantling the Fed wouldn’t be hard to do, just hard to get past shareholder bankers who’ve dug a deep moat filled with political hacks and misinformation about the Fed’s abilities and influence to protect it.

What would replace the Federal Reserve System?

That’s easy.

There’s a simple solution to replacing the Fed with an altogether new apparatus that serves the same functions as a central bank, without any of the manipulation or political pandering that attends central banks.

I’ll tell you what that is on Friday. But, I’d like to hear what you all think of the Fed and what you think should be done about it.

As far as my choice for the next president?

Whoever shouts out to the American electorate about the dangers of the Fed and what they’re going to do about it, specifically, and under the watchful eye of Sheila Bair.

Sincerely,

Shah

24 Responses to How the Next Fed Chair Should Transform the American Economy

  1. ed.h says:

    I have advocated eliminating the Fed for years, I don’t if Shelia Baird is the person, but we the people need to dismantle peacefully the corruption in the Imperial City….democracy, no we are governed by executive order, no longer by the constitution

  2. Jorge says:

    You ask, what do I think of the FED and what should be done about it? Several dissertations can be written on that. I’ll just say a few words.

    The FED embodies a victory over our once-great nation by a group of mega-criminals. It was for no small reason that a heated battle raged for many decades to prevent what these criminals achieved in 1913 – the establishment of a Central Bank (the FED) in the U.S. These criminals have been raping and pillaging ever since and they will undoubtedly continue to do so unless they are stopped.

    What should be done about the FED? That’s easy to say, very hard to do: (1) Shut the damn thing down ASAP and, (2) make the criminals behind the FED pay for their crimes. Revoke or amend statutes of limitations so that the likes of Greenspan and Bernanke can be held accountable for their crimes. Confiscate the loot they have stolen – let there be no gain from their crimes.

    Until these criminals are made to pay for their crimes they will laugh all the way to their bank. Criminals like these never reform or repent. They do not understand nor obey logic or rule of law. They only understand force and so they must be made to suffer harsh penalties for their crimes. That will in turn serve as a deterrent to all those thinking of committing the same crimes.

    Unless this happens the present crime wave will not only continue, it will worsen. Greed is insatiable – they will never stop!

  3. Conrad Lauer says:

    The US and Switzerland have a lot in common in their basic structure of “Federal Republics”. Why not in the central bank?

  4. Greg says:

    I respect your knowledge of markets and the Fed. I do not agree with your choice of Sheila Bair, she was head of the FDIC during the last crisis and I was not impressed by her comments and solutions expressed in interviews on TV.
    I definitely think the Fed should be placed in the junk bin of history. I am tired of them manipulating the economy and I am sick of the governors sticking their face in front of a camera and running off their mouths every few days and throwing the markets in disarray.
    I think the Fed is a huge danger to our freedoms and our Constitutional government. Set aside what the current President and Congress has done to diminish the Constitution in recent years, the Fed poses even more danger..
    Thank you Shah for covering this topic and the banking system and for allowing us to vent some of our anger.

  5. Robert says:

    Yes, finally someone involved in finance who believes the FED is just wrong. Why not end the fractionalized banking system and force the government to run on slightly less than incoming revenue as well. I’m not necessarily saying return to a gold standard, thought that served people well, but fiscal responsibility must be restored. Then we must free individuals to pursue wealth creation. Free from excessive regulation and taxation.

  6. reman says:

    Read Nehemiah 5: 1-19 and you have the whole story; how it operates, who the operator is, and the solution?

  7. Bill S. says:

    The Fed is incompetent and should be taught the difference between a recession and a depression. To fix the economy two thing need to be done. First we need to throw out our current system of fixed interest rates and replace it with a system of inflation adjusted rates. “Real” savings rates can be set between 3% and 4% with loan rates set between 5% and 6%. This would save the retirement accounts of everyone and prevent a banking collapse if the Fed tried to raise savings rates above 3% under the current system. Doing this would raise the monthly loan payments on all loans and would be a problem. Thus, the second part of the solution would be to raise wages by about $3 and hour or about $6,000 annually for about 100 million workers. While it would cost business about $600 billion, it should generate over $1.5 trillion in increased consumer spending annually taking into account the velocity of money. These may be radical solutions but would you prefer negative interest rates?

  8. Joe Maxwell says:

    She should design a system that provides good information about what the Fed is doing to people personally and how each is being hurt. Get to their pocketbooks. She should start a populist uprising against the shareholder bankers and then give them a way they can get back a little of what they had. It should be made in such a way that it can be modified later to take back much of their power. There should be some government control but not run by the government like the Post Office. At that point, I don’t have any idea of what to do.

  9. Wayne Case says:

    I agree completely with your article about the Fed. Unfortunately, the majority of Americans don’t have a clue that the Fed isn’t part of the government! Unless you and others continue to highlight the sins of the Fed, not enough people will get the message so that anything can be done. If every candidate for Congress had to answer the question, “Do you support doing away with the FED?”, then maybe enough discussion on the subject would expose the Fed for what it is!
    Thank you.

  10. John says:

    Unfortunately Shah, based on your preferences and mine, your choice for the next President would be either Bernie Sanders or Elizabeth Warren, and they were not nominated. Meanwhile, the nominee’s son-in-law is a partner in a hedge fund with two ex-Goldman guys (and take a wild guess about where their start-up funding is coming from?). Good luck to us all…

  11. Anonymole says:

    Changing the FED is like changing the U.S. Constitution at this stage of the game. The entrenched players will never relinquish control just as the Congress will never vote in amendments which would limit their power.

    The game board is permanently broken. Give up hope. Move to NZ perhaps.

  12. Tom says:

    Well, l guess you’d vote for trump then, he’s the only one talking about the national debt,but I’ve never heard of any politician talk the truth about the fed. And ur correct, not many people understand what the fed is anyway. Most People are the sheeple that get herded by the press and big corporations and pharma. And they even believe that THIER votes matter on the national level, while we know that they don’t matter one bit. But this is why trump is in the race at all, because I do believe due to people like yourself who actually write about the truth will slowly wake up some of the sheep and maybe, just maybe, one day the human race will emerge from our slumber and slay the bests!

  13. Dennis Harford says:

    Do you ever feel like you are shouting into a wall of egg crates? Your message seems to never get out. I personally totally agree with you but the vast majority has no clue that your message even needs to be addressed. Sad.

  14. Kevin Beck says:

    To answer for the problems created by the Federal Reserve, I only have one question to ask: Why can’t I get the same amount of goods and services with $1 today that I could get in 1914?

    The answer to that question details the failures of the Federal Reserve.

    In 1914, our dollar was legally defined as 1/20 oz. of gold. Now it’s worth 1/1300 oz. of gold. The gold hasn’t changed; it’s just that the dollar has gone on the path toward worthlessness. We don’t live in a world of rising gold prices (this year); we live in a world of declining dollar values. But because everyone measures their wealth in dollars instead of gold, they don’t notice this as a problem.

  15. ron says:

    yes dear shah its all true. the rothschilds and their cronie mates are taking and have taken everyone to the cleaners. over 99.9% of your american citizens would not have a clue about the fed. we in australia are even dumber! 99.999999% (conservative) of aussies are not aware that the reserve bank of australia is a branch of the ‘fed’. they have branches everywhere..maybe even nz. poor woodrow wilson regretted writing those love notes to his mistress..the jews paid her US$40k for them and said to woodrow..listen old boy we need to set up this fed thing so please convince congress. and he did! woodrow even convinced congress to enter the first ‘world war’..the jews wanted palestine(a british protectorate) and got it via the first and second world wars. the jews call us caucasians..goyems ‘dumb ones”. cheers

  16. George Galletly says:

    Shah, I am constantly amazed at your willingness to expose and take on the corruptness of the Federal Reserve and the Political Cronies who support them.

    However, you will remember, I know, that Ron Paul a Senator for 20 odd years tried repeatedly to get the ‘Fed” audited. He never could because most of the politicians are in the Big Banks back pockets and cannot , now, say ‘Boo’ to them.

    As admirable as it is that you expose them, there can be no change unless there is a grass roots revolution but sadly my observation is that the majority of Americans are clueless about how the ‘System’ works in “The great USA of A”.

    Any person with a grain of common sense can see how corrupt the present Banking System is but ‘solving it’ needs drastic and aggressive new action which will be almost impossible to bring about. Especially as the Powers that be will kick and scream and resort to extreme measures of retaliation against any attempt to diminish their power.

    However, ignorance is the tool of Satan , truth is the tool of God so if enough honest people would stand up and be counted , maybe, just maybe but I will not hold my breath.
    the best of regards to you

  17. Adrian Zolkover says:

    Shah Gilani, thanks for your explanation of a most important topic. In my book, you should be dean of fiscal responsibility. To the tune of $500 TRILLION in bank fraud and debt, see Comptroller of the Currency’s Quarterly Report on Bank Trading and Derivatives Activities – Table 1 and Table 2 which most recently appear in the Appendix. It shows where the largest 4-5 banks claim to own $400-$500 TRILLION + of bank derivatives; Table 1 derivatives at their banks, and Table 2 derivatives at their holding companies. Also see William Black’s best selling book THE BEST WAY TO ROB A BANK IS TO OWN ONE. William Black was the lead prosecuting attorney, when about 30 years ago, the savings and loan banks were going broke. He says, of the more current reports, these banks are broke, their derivatives are worthless and were given no due diligence, highly fraudulent, should be prosecuted and that the laws were and are on the books to prosecute. I say someone made $60 TRILLION in illegal commissions. I read that they estimate the wealth of claimed assets in our entire world is around $220-$240 trillion, as I recall. I think these criminals are the ones that mostly make up that 1/10 of 1% who Bernie Sanders says own as much as the 90% of the rest of the U.S. population. (This doesn’t mean that every billionaire is a crook. I think legal billionaire taxes should go as high as 94%. This way, we share the wealth of their productive activities; and this way they would remain a healthy part of our society and economy.) And I think the criminal billionaires-trillionaires want a credit crunch, especially along with a government shut-down. Then, even healthy corporations might go broke in 6 months because their customers wouldn’t be able to pay them, and they have huge fixed expenses. Then these crooks could buy them, and would need no stock holders. We wouldn’t even know who owns us!!! Additionally, the sellers of these derivatives insured their fraudulent products in case they failed (which they would) and collected probably many billions of dollars from AIG – that then went broke. To me, this looks like a coup from the top down. The above mentioned Quarterly Report has a content page that can connect you to their reports, which have been issued for many years. During George Bush Jr’s. 2 terms as President, these derivatives increased over 400%. As for the Fed now, per post-graduate economic courses I have taken, we do not want a downward spiral that would become out of control. Like, at all financial costs, avoid that. And I think this might explain why Ben Bernanke and Janet Yellen proceed with their policies. I think Janet Yellen has tried to take the secrecy and voodoo out of Fed policy, by giving a clear explanation as to exactly why she decided on a given policy; and as to what the public could expect if the variables changed. I also heard Ben Bernanke state that he thought there was some illegal activity going on with the Fed; but that he was not law enforcement. I read that President Kennedy was assassinated 3 months after he issued an executive order that would have removed policy making powers from the Fed. Also, attorneys don’t bring lawsuits unless they expect to win them; because in most cases they may not bring those lawsuits again. And the outcome might depend on the U.S. Supreme Court makeup. Also, statutes of limitations re time, etc. might run. It’s very complicated – I think even to legal experts.

  18. Tom says:

    Don’t you realize our Govt. was hi-jacked in 1913 when the Khazarian Cabal bribed congress to pass the unconstitutional amendment that gave control over our money supply to private bankers?.It had always been a battle between the “Jeffersonians, ( US bank) vs. the Hamiltonians ( private banks). The Hamiltonians won, and now the US has to pay interest to the buyers of bonds, be it the Chinese, or the central banks themselves who purchase these bonds.Before 1913 the US just printed money, when it was deemed necessary based on population growth or GDP. Interest was not required. The Fed ( in name only) bankers have become filthy rich based on this ponzi scheme, and the US can barely pay the interest on our 17 trillion debt. Ron Paul has tried to explain this scheme for many years, but has fallen on deaf ears, or is it because the bankers donate so much money to get our reps. re-elected?. Believe Donald J. Trump, when he says “everything is rigged”

  19. Arie(Harry) de Bruijn says:

    Years and years I am telling family members and friends that the USA Fed is a big fraud and manipulated by Wall Street bankers and often in a criminal way.
    Constantly I am complaining to USA people , including Money Morning, to do something about. The answers I get is nothing else than complete silence. I also asked several people whether they are afraid and of what? As a foreigner living in a foureign country I cannot do anything but calling the attention. Finally Money Morning’s Shah is writing about the dirty work the Fed. and its bosses is doing.
    i wish Shah all the best of luck and really hope that he will succeed in getting more and more people on the barricades to fight and stop actions of those criminals.. ISIS is killing people by terrorist actions and beheadings and the
    Fed and other Wall Street lackeys are killing people by criminal actions in the markets so that small investors are losing their savings.

  20. Jim Bower says:

    Every time I go into Wells Fargo or Chase Bank, I ask the tellers who owns the FED. Not one has a clue. In fact, most of them don’t really know what the FED is or what it does. If the people in the banking industry don’t know what the FED is, how can you expect the average citizen to know?

    Having earned an MBA at one of the 10 best schools in the UD, I can assure you business schools are making no attempt to educate students about the FED.

    We are doomed!

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