The Federal Reserve Bank – It’s Not What You Think (Part One – a Bit of History)

by VINCENT GIOIA December 4, 2008
The Federal Reserve is a private company of bankers with twelve branch banks that confiscate our money; they have been doing this for almost a hundred years. They are not part of the United States government, but they collect hundreds of billions of dollars, sometimes trillions, from the American taxpayers every year.

In Part Two of this series I will tell you who owns the Federal Bank – you will be surprised.

As we examine the Federal Reserve System, we should recall what banker Meyer Rothschild said:

“Let me issue and control a nation’s money, and I care not who writes its laws.”

The start of the idea of a central bank began with Alexander Hamilton. Hamilton lobbied for the first private Federal Bank and, in 1789, Congress chartered the bank.

This didn’t sit well with Thomas Jefferson who correctly predicted the outcome. Thomas Jefferson was adamantly opposed to the idea of a privately owned federal bank and said “I sincerely believe the banking institutions having the issuing power of money are more dangerous to liberty than standing armies.” He was right.

Over the early part of our history there were those who, like Jefferson, saw the danger to liberty by private banking institutions but the idea also had its advocates, for reasons not entirely clear but that are ripe for speculation.

In 1811, under President James Madison, Vice President George Clinton broke the tied vote in Congress to cast the bankers out, refusing to renew the charter for the bankers. Unfortunately, it was President Madison who proposed a second United States privately owned Central Bank, and it came into existence in 1816.

However, in 1836 President Jackson, overriding Congress, closed it commenting: “The bold effort the present bank had made to control the government are but premonitions of the fate that awaits the American people should they be deluded into a perpetuation of the institution or the establishment of another like it.” (We now have another one like it.)

Andrew Jackson also said, when speaking to the bankers, “You are a den of vipers and thieves. I intend to rout you out, and by the eternal God I will rout you out.”

There were actually two Federal Reserve Systems and each lasted about 20 years; we are now almost a hundred years into the third one.

In 1913 Woodrow Wilson was elected president of the United States. Prior to his election he needed financial support for his campaign so he agreed that, if elected, he would sign the Federal Reserve Act, in return for that financial support.

In December 1913 while many members of Congress were home for Christmas, the Federal Reserve Act was rammed through Congress and was later signed by President Wilson. At a later date, Wilson admitted with remorse, when referring to the Federal Reserve, “I have unwittingly ruined my country.”

Another thing not commonly known is that at the beginning of our country there was no income tax at all. We didn’t have, nor did we need, an income tax until the bankers got into the government picture. The income tax was needed only to pay interest to the bankers for our money that they loan to our government. Yes, you read that right, the FED, mostly on paper and computer, creates money and pays the treasury a small printing fee for currency, and then loans this money to our government. Our taxes then pay them interest on this loan that cost the FED virtually nothing to make. What a sweetheart deal they have going for them!

As of March 6, 2006, the national debt stood at 8.2 trillion dollars. The American taxpayers – YOU! - have paid the Federal Banking System $173,875,979,369.66 in interest on that debt in just five months, from October, 2005 through February, 2006. There has never been a scam like this in the history of the world.

Furthermore, the Constitutional Amendment that created the income tax was never properly ratified by the states. According to the two volume work by Bill Benson and Red Beckman, “The Law That Never Was”, the 16th Amendment which created the IRS, was never properly ratified - not even by one state. These gentlemen traveled the then-48 states to verify that fact. So in a very real sense, our income tax isn’t entirely legal, as many have proclaimed, but try not paying it and see how far you get before the Feds come after you and confiscate everything you own.

Here are some other interesting facts about our Federal Reserve System. In the nearly 100 years of the existence of the FED, it has NEVER been audited, and they don’t pay income tax on the trillions of dollars they take from us. Furthermore, according to the Congressional record, the U.S. government can buy back the FED at any time for $450 million; that’s about half the amount we pay them daily.

Why then you might ask does not Congress buy back the FED? This is a good question and one that has never been asked publicly by anyone.

One reason may be that Congress likes the FED because Congress can spend all they want with no restraints; when they do, they just put the debt burden on our children and so on down the line.

Article 1, section 8, of the Constitution states:

“The Congress shall have the power …. to coin Money, regulate the value thereof,”

Nowhere in the Constitution does it give Congress the authority to delegate this responsibility, much less to a bunch of private bankers.

There have been some presidents who, like Andrew Jackson, recognized the evil of the Federal Reserve Bank and tried to do something about it. Abraham Lincoln took on the bankers, and that may have cost him his life.

During the Civil War (from 1861-1865), President Lincoln needed to finance the war for the north. The Bankers were going to charge him 24% to36% interest. Lincoln was incredulous and said he would not think of plunging his beloved country into a debt that the country would find impossible to pay off.

So Lincoln advised Congress to pass a law authorizing the printing of full legal tender Treasury notes to pay for the war effort. Lincoln recognized the great benefits of doing this. At one point he wrote: “… (we) gave the people of this Republic the greatest blessing they ever had – their own paper money to pay their debts.”

The Treasury notes were printed with green ink on the back, so the people called them “Greenbacks.” Lincoln had printed over 400 million dollars worth of Greenbacks (the exact amount being $449,338,802), money he delegated to be created, debt-free and interest-free money to finance the war. It served as legal tender for all debts, public and private. He printed it, paid it to the soldiers, to the U.S. Civil Service employees, and bought supplies for the war.

Lincoln was assassinated shortly after the war and Congress revoked the Greenback Law and enacted, in its place, the National Banking Act. The national banks were to be privately owned and the national bank notes they issued were to be interest-bearing. The Act also provided that the Greenbacks should be retired from circulation as soon as they came back to the Treasury in payment of taxes.

In more recent times, President John F. Kennedy had the foresight to see a bad deal had been struck in the creation of the Federal Reserve Bank. He had the courage to do something about it, and that may have cost him his life, too.

President Kennedy also saw the danger in a private Federal Bank having the power to issue money. On June 4, 1963, Kennedy signed a Presidential decree, Executive Order 11110. This virtually stripped the Federal Reserve of its power to loan money to the United States government at interest. President Kennedy declared the privately owned Federal Reserve Bank would soon be out of business. This order gave the Treasury Department the authority to issue silver certificates against any silver in the treasury. This executive order still stands today. In less than five months after signing that executive order, President Kennedy was assassinated on November 22, 1063. One can only speculate if Lincoln’s and Kennedy’s brave acts and subsequent deaths were in any way related to their distaste for the Federal Reserve.

The United States Notes (silver certificates) JFK had issued were taken out of circulation immediately. The Federal Reserve Notes continued to serve as the legal currency of this nation. It is estimated that 99% of all U.S. paper currency circulating in 1999 were Federal Reserve Notes.

What is a Federal Note? It’s just a piece of paper. A Federal Reserve note is just what it looks like; it’s just a piece of paper with no backing whatsoever. This is why Congress hates gold- and silver-backed money: it forces them to live within their means. Having a private bank able to print money and loan it to the government is just fine with Congress because it gives them unlimited ability to spend, and taxpayers will be on the hook for the interest due to the private bankers.

Do you know in the nearly 100 years of its existence, the FED has NEVER been audited and they don’t pay income tax on the billions of dollars they take from us? Does this seem fair to you?

Henry Ford once said “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

Now I’m not a conspiracy buff; but if I were, I might wonder who might benefit most from the assassination of two presidents who wanted to reform the private Federal Reserve Banking System. Can you think of any group of people who might benefit from the assassination of Abraham Lincoln and John Kennedy?

When you follow the money there are some logical, but admittedly pretty scary, possibilities.
 - In Part Two of this series, I will tell you who owns the Federal Bank.

Family Security Matters Contributing Editor Vincent Gioia is a retired patent attorney living in Palm Desert, California. His blogs at and he may be contacted at

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