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The US Does Not Own Or Control Its Money System

Politics / Central Banks Sep 29, 2010 - 03:18 AM GMT

By: Graham_Summers


Best Financial Markets Analysis ArticleWhat is money?

Most of our adult lives are devoted to making this stuff. Next to food, water, and sleep it’s the #1 concern for most human beings in the US. Nearly 80% of divorced couples cite financial difficulties as a reason for the divorce.  And the American Psychological Association reports that 73% of Americans cite money as a source of significant stress.

And yet, despite being the medium for every economic transaction in our financial system, few if any individuals actually understand what money is and how it works in today’s Federal Reserve banking system.

So I ask again, what is money?

The common answer is: Dollar bills or coins.

The common answer is wrong.

The US monetary system is in fact entirely backed-by debt. Dollars are not actually assets, they are debt-backed instruments produced by the Federal Reserve. I realize this is difficult to swallow, but have a look at the Dollar bill itself.

Note the top of the bill does NOT read “US Dollar” or “official currency of the United States.” Instead it reads “Federal Reserve Note.”

So this bill is in fact, NOT produced or controlled by the US Government. . Instead, it’s a note issued by the Federal Reserve.

The confusion continues if you look around the rest of the Dollar’s front. Nowhere does it state that the bill was produced by the US Government or was generated in a Federal facility. Instead you see a black circle on the left that reads “Federal Reserve Bank of San Francisco,” indicating that this particular note entered circulation via the Federal Reserve Bank of San Francisco.

But surely this is just a round about way of saying the Dollar is the US’s currency, right? After all, the Federal Reserve is a branch of the US Government.

Wrong. The Federal Reserve is in fact a privately held organization. If you go to the Federal Reserve’s website you will see that while it IS a .gov web address (, the site itself is for “The Board of Governors of the Federal Reserve System,” or the management of the Federal Reserve, NOT the Federal Reserve System itself.

Nowhere does this site state what the Fed really is, who owns it, or how it even operates. Instead, all you see are profiles of the various members of the Board of Governors (including current Fed Chairman Ben Bernanke) and articles detailing the data the Fed tracks and the policies it enacts.

Imagine if General Motors’ website made no mention of cars or trucks but simply focused on GM’s management team and the policies they employ at the company. THAT’S the equivalent of the Federal Reserve’s website.

Now, the Federal Reserve DOES maintain another website that focuses more on the Federal Reserve Banking System’s services, however this website is NOT a .gov site, but a .org site:, meaning it has NO involvement with the US Federal Government/

Which brings me to shocking truth #1: The US Government neither owns nor controls the US Federal Reserve. At best, the US Federal Reserve is a quasi-governmental organization.

The President of the United States does choose the Chairman of the Federal Reserve’s Board of Governors. However, even this setup is a farce as the Fed presents candidates from whom the President can choose from. Moreover, the confirmation of a Fed Chairman takes place in Congress, whose members receive incentives both monetary and other from Fed lobbyists as the below quote attests:

"I was advised that rejecting [Bernanke's] nomination would cause markets to nose dive, which would hurt retirees and families saving for their future. I am not enthusiastic in my support. " - Senator Barbara Mikulski (D- MD)

Thus, even the Government’s appointment of the Chairman of the Board of Governors of the Federal Reserve is a farce. It is at best a dramatic gesture meant to instill the notion that the Fed is somehow affiliated with or controlled by the US Federal Government.

However, in reality the Fed is a totally separate entity, a privately held organization controlled by the most powerful people on the planet. To put it plainly, the Fed is a cartel permitted to operate and control the US monetary system with the approval of the US Government.

This is why the US Dollar states “Federal Reserve Note” instead of  “Currency of the United States” or “Produced by the US Government for the Citizens of the United States of America” or some such thing.

The US Government didn’t create the US Federal Reserve system, all it did was give the latter its seal of approval metaphorically (by passing the Federal Reserve act of 1913 which created the Fed as a legal entity and gave it control of the US monetary system) AND literally (by placing the US Treasury Seal on every Federal Reserve Note the Fed produces):

It’s one of the best hidden secrets in the world… and yet it’s staring all of us in the face. How many Americans realize this? Better yet, how many Americans realize that our entire money system is in fact backed by debt?

1 in 100,000?

1 in 1,000,000?

Good Investing!

Graham Summers

PS. If you’re worried about the future of the stock market, I highly suggest you download my FREE Special Report detailing SEVERAL investments that could shelter your portfolio from any future collapse. Pick up your FREE copy of The Financial Crisis “Round Two” Survival Kit, today at:

Graham Summers: Graham is Senior Market Strategist at OmniSans Research. He is co-editor of Gain, Pains, and Capital, OmniSans Research’s FREE daily e-letter covering the equity, commodity, currency, and real estate markets. 

Graham also writes Private Wealth Advisory, a monthly investment advisory focusing on the most lucrative investment opportunities the financial markets have to offer. Graham understands the big picture from both a macro-economic and capital in/outflow perspective. He translates his understanding into finding trends and undervalued investment opportunities months before the markets catch on: the Private Wealth Advisory portfolio has outperformed the S&P 500 three of the last five years, including a 7% return in 2008 vs. a 37% loss for the S&P 500.

Previously, Graham worked as a Senior Financial Analyst covering global markets for several investment firms in the Mid-Atlantic region. He’s lived and performed research in Europe, Asia, the Middle East, and the United States.

© 2010 Copyright Graham Summers - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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