Dow Theory Letter of June 28, 2006, Richard Russell

THE FED - The papers are full of articles regarding what the Fed might do or not do with short rates. But how is it that nobody ever questions the very worth or non-worth of the Federal Reserve itself. The Fed has never been audited. It's legitimacy, it's worth, is NEVER questioned - the Fed appears immune to questions. One problem is that nobody understands what a monstrous fraud the Fed is. When the US government needs money, it doesn't just issue United States Federal Notes (dollars), which it certainly could do. In other words, incredibly, the US government does not issue its own money. Instead, the government issues bonds, thereby loading itself with ever increasing interest-bearing debt. Here's how this disgrace works -The US government issues a billion dollars of interest-bearing US government bonds. It takes the bonds to the Federal Reserve - the Fed accepts the bonds and places one billion dollars in a checking account. The government then writes checks to the total of a billion dollars against the checking account - a billion dollars that has been created "out of thin air." Meanwhile, the debts of the US grow and grow. And the government pays interest on the bonds. Yet that isn't enough for the US government. It taxes its citizens, taking away a percentage of their passive and active earnings. And as if that isn't enough, it robs its citizens via inflation, so that as their living costs rise, simultaneously their savings are whittled away. The Fed has been in existence for 93 years. In those 93 years the Federal Reserve Notes that the Fed issues have lost 98% of their purchasing power. To cover up this monumental scam, we hear the Fed blather and bluster about how worried they are about the current inflation rate. The current inflation rate is the cover-up; what kills us is the systematic year-after-year loss of purchasing power of those billions of fiat Federal Reserve Notes. So the system allows this semi-private banking system to create money out of absolutely nothing (all of it a loan to our government) and charge interest on this debt forever. Thus, the Fed collects interest on the government's own money. It's a system that is beyond belief, but one that runs the life blood of the nation - the life blood of a nation is its money. A communique sent from the Rothschild investment house in England to its associates in New York noted, "The few who understand the system. . . will either be so interested in its profits or so dependent on its favors that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending . . will bear its burdens without complaint."