Saturday, March 20, 2010

The Federal Reserve: Though most Americans have heard of it, few know much about it.

Source: New American

Written by James Perloff

Federal Reserve BuildingNearly all Americans know they are plagued by inflation. In 1962, a postage stamp cost four cents, a candy bar a nickel, a movie ticket 50 cents, and a pair of tennis shoes $5. A new imported Renault automobile cost $1,395, annual tuition at Harvard was $1,520, and the average cost of a new house $12,500. Over the last century, a dollar's purchasing power has declined over 95 percent — i.e., it won't buy what a nickel did in 1909.

What causes inflation? The public hears various explanations from the establishment media — that oil's rising cost causes inflation, since nearly all industry sectors use it; or that inflation is the fault of American workers demanding wage increases, which has a ripple effect throughout the economy. In other words, Joe tells his employer, "Boss, my wife's expecting. How about a raise?" The boss says, "Joe, the only way I can afford that is by raising our prices — I'll have to pass the cost on to our customers." Then firms doing business with Joe's company say, "Since you've raised your prices, we'll have to raise ours." And so, all across America, prices rise because "greedy" Joe, and millions like him, asked for a raise.

Furthermore, the public has been lulled into believing that inflation is inevitable, like "death and taxes." Indeed, based on the Consumer Price Index (CPI), the broad index used to measure the price of goods and services, that seems true. America has experienced general price increases every year since 1955, without exception.

But as we can easily prove, inflation is not inevitable. Figure 1 depicts American price levels from 1665 to the present. Note there was no significant increase for the first 250 years. Little blips upward are on the graph, as during the American Revolution, War of 1812, and Civil War, when the United States issued large quantities of paper money to pay for those conflicts. Of course, increasing the supply of money (which is what inflation really is) diminishes its value, causing prices to rise. But notice that, after the wars, money always returned to its normal value. A dollar in 1900 was worth the same as in 1775; there had been no net increase in the cost of living since George Washington's day. Throughout this time, Americans asked for, and received, wage increases, without causing prices to rise overall.

Figure 1 Inflation GraphBut look at the graph's right side. During World War I, our currency inflated, but instead of resuming its normal value afterwards, it continued inflating out of sight. American money, relatively stable for 250 years, began to rapidly and permanently lose its value. This did not happen by chance; every effect has a cause. Around the time of World War I, something significant must have happened to induce this transformation. As we shall see, the cause of this transformation has nothing to do with Joe and others who, suffering from the effects of inflation, asked for a raise.

The Bankers' Beast

The change came from a single factor: creation of the Federal Reserve in 1913. Though most Americans have heard of it, few know much about it.

Ben Bernanke is current chairman of the Federal Reserve Board; Alan Greenspan held that position from 1987 to 2006. The Fed chairman has been called America's economic czar, because he and the board set U.S. interest rates. This in turn impacts the stock market's direction. If interest rates rise, CDs and other interest-bearing securities appear more profitable, causing money to flow out of the riskier stock market. But if interest rates fall, investors tend to return to stocks (the recent meltdown notwithstanding). Mutual fund managers try to stay ahead of the curve; when the Fed chairman holds a news conference, their fingers are often poised over their "buy" and "sell" buttons, hoping the chairman will reveal some hint about the direction of interest rates.

The Fed was established when Congress passed the Federal Reserve Act in 1913. But the original legislation, containing the essential points of that act, was introduced by Senator Nelson Aldrich, front man for the banking community. Few today have heard of Aldrich, but many are familiar with billionaire Nelson Rockefeller, who was Gerald Ford's vice president, long New York's governor, and one of America's richest men. His full name: Nelson Aldrich Rockefeller — named for his grandfather, Nelson Aldrich. Aldrich's daughter married John D. Rockefeller, Jr., and his son Winthrop served as chairman of the Rockefellers' Chase National Bank. Long associated with America's richest family, when Nelson Aldrich spoke on Capitol Hill, insiders knew he was acting for the Rockefellers and their allies in high finance.

The legislation he introduced in the Senate, which became the basis of the Federal Reserve System, was not written by him. It was crafted by several of the world's richest bankers, at a secret nine-day meeting in 1910, at a private club on Jekyll Island off the Georgia coast. This is well documented. The first reporter to break the Jekyll Island story was B.C. Forbes, founder of Forbes magazine.

Many years ago, Citibank was called National City Bank, and was largely controlled by the Rockefellers. Its president, Frank Vanderlip, attended the Jekyll Island meeting and discussed it in The Saturday Evening Post 25 years later:

There was an occasion near the close of 1910 when I was as secretive, indeed as furtive, as any conspirator.... I do not feel it is any exaggeration to speak of our secret expedition to Jekyll Island as the occasion of the actual conception of the Federal Reserve System.... We were told to leave our last names behind us. We were told further that we should avoid dining together on the night of our departure. We were instructed to come one at a time and as unobtrusively as possible to the terminal of the New Jersey littoral of the Hudson, where Senator Aldrich's private car would be in readiness, attached to the rear end of the train for the South. Once aboard the private car, we began to observe the taboo that had been fixed on last names.... Discovery, we knew, simply must not happen. If it were to be discovered that our particular group had got together and written a banking bill, that bill would have no chance whatever of passage by Congress.

Attending this meeting were agents from the world's three greatest banking houses: those of John D. Rockefeller, J.P. Morgan, and the Rothschilds. Together they represented an estimated 25 percent of the world's wealth. Acting for the Rockefellers were Senator Aldrich and Frank Vanderlip. Representing the Morgan interests were: Benjamin Strong, head of J.P. Morgan's Bankers Trust Company; Henry Davison, senior partner in J.P. Morgan & Co.; and Charles Norton, head of Morgan's First National Bank of New York. But the most important figure, credited with running the meeting, was Paul Warburg, who belonged to a prominent German banking family associated with the Rothschilds. The latter, the world's most powerful banking dynasty, had grown rich by establishing central banks that loaned money to European countries. Its patriarch, Amschel Mayer Rothschild, said: "Permit me to issue and control the money of a nation, and I care not who makes its laws."

In 1902, Paul Warburg came to America, intending to establish a similar central bank in the United States. Shortly after immigrating, he became a partner in Kuhn, Loeb, & Co., the Rothschilds' powerful banking satellite in New York City.

The Rothschilds had long been linked to America's two foremost banking families, the Rockefellers and Morgans. They had provided seed money for John D. Rockefeller's Standard Oil Company, and had influenced the Bank of England to bail out J.P. Morgan with a low-interest loan of 800,000 pounds, when his firm was verging on collapse in 1857.

The axis of Warburg/Rothschild, Morgan and Rockefeller, and their Wall Street confederates, became known as the "Money Trust." It worked in unison to force a central bank on America. In 1907, Morgan, who controlled numerous newspapers, began a false rumor concerning the insolvency of a rival bank, the Trust Company of America. The rumor led to a drastic run on the bank by depositors. This was part of the frenzy that historians call the Panic of 1907. Subsequently, Morgan's and Rockefeller's newspapers clamored for a central bank to prevent further crises; Senator Aldrich echoed the call in Congress; and Paul Warburg traveled the country lecturing on why the change was needed.

All this materialized in the Federal Reserve, which ultimately resulted from the legislation, penned on Jekyll Island, that Senator Aldrich introduced. Partly because of the senator's well-known ties to Wall Street, Congress never passed the Aldrich Bill itself. But the bankers gained acceptance of a very similar act, the Glass-Owen Bill, much of which was copied word-for-word from the Aldrich Bill.

On December 23, 1913, when Congress was eager to adjourn for Christmas, the Glass-Owen Bill passed, officially creating the Federal Reserve System. This name itself had been carefully chosen to deceive Americans. While "Federal" implied public control, it is in fact owned by private shareholders. "Reserve" suggested it would hold reserves to protect banks, but it has no hard assets — only bonds and other instruments of debt, and, as we will see, "fiat money," created from nothing. "System" implied its power would be diffuse (through 12 regional Federal Reserve banks), whereas actual power would be centralized in the Board and the New York Fed with its powerful Open Market Committee.

Monetary Motives

Why did the bankers want the Fed? Whom do you suppose President Woodrow Wilson named first vice chairman of the Federal Reserve Board (a position from which national interest rates would be set)? Paul Warburg. Who was first head of New York Fed, the system's nucleus? Benjamin Strong. Thus the very men who had secretly planned the bank now controlled it. The foxes were running the henhouse. At the time, neither Congress nor the public had any inkling of the Jekyll Island meeting.

Paul Warburg's annual salary at Kuhn, Loeb, & Co. had been $500,000, the equivalent of well over $10 million in today's dollars. He relinquished that for a Federal Reserve Board position that paid only $12,000. Was it altruistic patriotism that tempted Warburg to make this transition? Or was it because $500,000 paled in comparison to the countless millions he could make, for himself and his associates, by controlling American interest rates, and thus making the stock market rise or fall at will?

Charles Lindbergh, Sr., father of the famous aviator, was a distinguished member of the U.S. House of Representatives. Congressman Lindbergh helped lead the fight against the Federal Reserve Act. In December 1913, he declared on the floor of the House:

This act establishes the most gigantic trust on Earth. When the President signs this act the invisible government by the money power [Lindbergh here refers to the Rothschild-Rockefeller-Morgan alliance], proven to exist by the money trust investigation, will be legalized. The money power overawes the legislative and executive forces of the nation. I have seen these forces exerted during the different stages of this bill. From now on depressions will be scientifically created. The new law will create inflation whenever the trust wants inflation. If the trust can get a period of inflation, they figure they can unload stocks on the people at high prices during the excitement and then bring on a panic and buy them back at low prices. The people may not know it immediately, but the day of reckoning is only a few years removed.

Lindbergh's words were prophetic. Did inflation follow the Fed's establishment? Yes; Figure 1 graphically proves the impact on price levels. Were stocks unloaded on the people at high prices, then bought back at low prices after a panic? Yes. The "day of reckoning" Lindbergh predicted came with "Black Thursday" and the Great Crash of 1929.

The October 1929 stock market collapse wiped out millions of small investors, but not the Money Trust's insiders, who had already exited the market. Biographers attribute this to their fiscal "wisdom." But fiscal foreknowledge, especially of the Federal Reserve policy they were controlling, is more like it. The Fed increased the discount rate from 3.5 percent in January of that year to 6 percent in late August. While the Fed was not the only tool used to precipitate the crash, it was one of the most preeminent. Senator Robert Owen, who cosponsored the Glass-Owen Bill that created the Fed, later testified before the House Committee on Banking and Currency:

The powerful money interests got control of the Federal Reserve Board through Mr. Paul Warburg, Mr. Albert Strauss, and Mr. Adolph C. Miller.... The same people, unrestrained in the stock market, expanding credit to a great excess between 1926 and 1929, raised the price of stocks to a fantastic point where they could not possibly earn dividends, and when the people realized this, they tried to get out, resulting in the Crash of October 24, 1929.

Congressman Louis McFadden, chairman of the House Committee on Banking and Currency from 1920 to 1931, said of the crash: "It was not accidental. It was a carefully contrived occurrence. The international bankers sought to bring about a condition of despair here so that they might emerge as rulers of us all." McFadden stated further: "When the Federal Reserve Act was passed, the people of these United States did not perceive that a world banking system was being set up here — a superstate controlled by international bankers acting together for their own pleasure."

Curtis Dall, son-in-law of President Franklin D. Roosevelt, was the syndicate manager for Lehman Brothers. He was on the floor of the New York Stock Exchange on the day of the crash. He said of it: "Actually, it was the calculated 'shearing' of the public by the World Money powers." Afterwards, the Money Trust moved back into the market — exactly as Congressman Lindbergh had predicted. They bought up stocks that once sold for $10 per share at $1 per share, expanding their ownership of corporate America.

Something From Nothing

But stock market manipulation was not the only purpose behind the Federal Reserve. Another was creating money from nothing. The book that best explains this, and the Fed itself, is G. Edward Griffin's The Creature From Jekyll Island.

As nearly everyone knows, the U.S. government is very expensive. The federal deficit for 2008 was $455 billion. This means that, on an average day, the government spent over $1 billion more than it took in.

How does the government get money? Chiefly from taxes and the sale of government bonds. (The latter is a poor funding method, since money from bonds must be repaid later with interest.) But these revenues never come close to satisfying the federal budget's demands.

Still, despite insufficient income, the government always meets its obligations. It continues to pay federal employees, defense contractors, Social Security and Medicare recipients, etc. How does the government manage this?

It happens through a little-known mechanism. We'll borrow from an illustration given by Griffin. Let's say that, this week, the federal government is short one billion dollars needed to pay its employees. It sends a Treasury official to the Federal Reserve building, where a Fed officer literally writes out a check for $1 billion to the U.S. Treasury. This check, however, is not based on any assets the Fed actually holds. It is "fiat money," created from nothing. If an American citizen wrote a check without assets to back it up, he'd be jailed. But for the Federal Reserve, it's perfectly legal. The technical term the Fed uses for this is "monetizing the debt."

Warburg and his accomplices knew that fiat money would give the government the potential to spend without limit. The banking cartel was, and still is, intimately linked to corporations that did business with the U.S. government. This meant these corporations (in modern culture, Halliburton, Bechtel, AT&T, etc.) could earn virtually unlimited revenues from government contracts.

But the mechanism also benefited the bankers directly. As Griffin notes, what do you suppose the federal employees will do with that billion dollars in salary? Deposit it in their banks. How does a bank make profits? By loaning out deposited money. The more money in, the more it can loan. Thus, out of nothing, the Fed has created a billion loanable dollars for the banks.

Furthermore, this billion automatically becomes ten billion, because under Federal Reserve rules, a bank need only keep 10 percent of deposits in reserve. For every dollar deposited, nine may be loaned. Thus the Fed's creation of $1 billion from nothing actually manufactures an additional $9 billion in loanable money for the banks.

In Europe, the Rothschilds had perfected this system of fabricating bank deposits through central banks. Warburg largely designed the Federal Reserve from that model. For the bankers, the system meant countless profits, but for the rest of us, endless inflation. Why? Because every time the Fed creates dollars from nothing, it increases the amount of money in America, thereby decreasing money's value.

A textbook example of inflation struck Germany in the early 1920s. Defeated in World War I, Germany was compelled to pay the Allies massive reparations. To meet this obligation, it printed huge quantities of money. This decreased the value of German currency so badly that by November 1923, a loaf of bread cost 80 billion marks. People carted paper money around in wheelbarrows; some used it as fuel for stoves.

Whenever the Fed "monetizes" the debt, it does the same thing as Germany, only on a smaller scale. In today's high-tech world, of course, printing money is no longer necessary; the Fed can simply create money electronically, but the inflationary impact is the same. That is why, following 250 years of stable prices, we've had pernicious inflation since the Fed's birth in 1913.
Incidentally, Washington politicians love this system. By letting the Fed finance their expenditures with money made from nothing, politicians know they can spend without raising taxes. Tax increases are a "kiss of death" at reelection time (as President George Bush, Sr. learned in 1992 after voters rejected him for breaking his pledge of "Read my lips, no new taxes"). When the Fed produces more currency, making prices rise, who do we blame? Not the Fed. Not politicians. Instead, we blame the local retail store. "Why are you guys jacking up your prices?" Or we blame the candy company for making smaller chocolate bars, or the cereal company for putting less corn flakes in the box. But these businesses are simply trying to cope with the same dilemma as we are: inflation. The culprit is the Federal Reserve, and the problem is not that prices are going up, but that money's value is going down.
George Bush, Jr. waged war against Iraq without increasing taxes, and even introduced new tax credits and rebates. How did he manage this? Instead of raising taxes like his father, he had the Fed largely finance the war with fiat currency. This massive inflation caused the cost of food, energy, college tuition — everything — to soar.

Actually, inflation is a tax, a hidden one the public generally doesn't perceive as such.

A Well-coordinated Plot

After developing this scheme, the bankers still faced a problem. The billions deposited in their banks, created from nothing, still belonged to depositors. To make it profitable, the bankers had to loan it to someone.
They wanted to loan the money especially to one man: Uncle Sam — right back to the government through which they had it manufactured. Why? Because Uncle Sam would borrow astronomically more than individuals or businesses, and unlike the latter two, could always guarantee repayment.

Government borrowing is generated through sale of bonds. The Federal Reserve was empowered to buy and sell U.S. government bonds. Who would purchase those securities from the Fed? To a great extent, the Money Trust's own banks and investment firms. We thus see yet another motive for the Fed: interest on government loans.

But the Jekyll Island bankers still had a problem. How would America pay back all the interest on those loans? In 1913, the U.S. government had few revenue sources; its largest was tariffs collected on foreign imports.

The bankers' solution? Income tax. Though now an accepted way of life, income tax was not always around. The original U.S. Constitution excluded it; in 1895, the Supreme Court ruled it would be unconstitutional.

Therefore the only way the Money Trust could establish income tax was by legalizing it through a constitutional amendment. The senator who introduced that amendment in Congress? Nelson Aldrich - the same senator who introduced the incipient Federal Reserve legislation.

Why did Americans accept income tax? Because it was originally only one percent of a person's income, for salaries under $20,000 (the equivalent of over $400,000 in today's dollars). On Capitol Hill, the tax's supporters issued assurances it would never go up. So patriotic Americans said: "If Uncle Sam needs one percent of my salary, and I can always keep the rest, it's OK by me!"

But we all know what happened. Congress later dolefully informed Americans it needed to raise taxes a smidge. A few smidges later and, depending on bracket, we're losing 15 to 33 percent of our income to federal tax.

It was a long-range plan.

Some may object that rich bankers would never have wanted an income tax. After all, it supposedly "soaks the rich": the wealthier you are, the more you pay. It's true that the income tax structure is graduated. If an American today earns $100,000 or $200,000 per year, he or she usually owes lots of tax. But not the super-rich. The Warburg-Rockefeller-Morgan axis had no intention of paying income tax.

When Nelson Rockefeller sought to become Gerald Ford's vice president, he had to disclose his tax returns. These revealed that in 1970, the billionaire hadn't paid one cent of income tax. Likewise, the Senate's Pecora Hearings of 1933 discovered that J.P. Morgan had not paid any income tax in 1931 and 1932.

How did the Money Trust escape taxes? Primarily by placing their assets in tax-free foundations. The Carnegie and Rockefeller foundations were already operational by the time income tax passed.

Let's review the scenario. In 1913, the bankers created the Federal Reserve, which not only gave them control over interest rates and thus the stock market, but empowered them to create billions of dollars from nothing, which they would then loan back to America. Also in 1913, the bankers installed the income tax, enabling them to exact repayment on these interest-bearing loans to the government.

Only one thing was still missing: a significant reason for America to borrow. In 1914, just six months after the Federal Reserve Act passed, Archduke Ferdinand was assassinated, triggering the start of World War I. The United States participated; as a result, our national debt grew from a manageable $1 billion to $25 billion. Ever since, America has been immersed in skyrocketing debt — now officially over $10 trillion.

The consolidation of power in Washington has also grown immensely, much to the benefit of the political and financial elites who hold the reins of power. Both a central bank and an income tax — particularly a graduated income tax that largely consumes the wealth of the middle class in the name of taxing the wealthy — are powerful tools for bringing about this consolidation. In fact, this is why Karl Marx, in his Communist Manifesto, called for both in his 10-step plan for establishing a communist state. Step 2 was: "A heavy progressive or graduated income tax." Step 5 was: "Centralization of credit in the hands of the State, by means of a national bank with state capital and an exclusive monopoly."

Thus, in 1913, the United States enacted two of Marx's conditions for a communist totalitarian state. The original Constitution excluded an income tax, which the Founding Fathers opposed. Concerning money, the Constitution declares (Article 1, Sec. 8): "Congress shall have the power to coin money and regulate the value thereof." The Federal Reserve Act transferred this authority from elected representatives to bankers.

In America today, many young couples work hard. Commonly, both spouses hold jobs. A young man might say: "When my great-grandfather came to this country, he worked only one job, but he owned a house, had seven kids, and his wife never worked outside the home. But me and Mindy, we're working two jobs, we have only one kid, and can barely pay the rent. What are we doing wrong?"

But it's hardly their fault. When great-grandpa came to America, he paid no income tax, and his dollar was stable; it didn't plummet in value every year as it does now.

But you'll be glad to know the bankers are sorry about the trouble they've caused. They realize people can't make ends meet, and they've found a solution: multiple credit cards. Can't afford this month's groceries? Just swipe some plastic. Of course, they will charge double-digit interest on that.

Thus the banking cartel created inflation and income tax, robbing us of our income; therefore we don't have enough to live on, forcing us to borrow from ... the banks.

The solution to the Fed? Get rid of it!

Graph Source: Robert Sahr, Oregon State University

See also "Creating 'Wealth': the Fed Shows No Reserve."


Written by James Perloff
Thursday, 02 April 2009 18:00

Federal Reserve BuildingNearly all Americans know they are plagued by inflation. In 1962, a postage stamp cost four cents, a candy bar a nickel, a movie ticket 50 cents, and a pair of tennis shoes $5. A new imported Renault automobile cost $1,395, annual tuition at Harvard was $1,520, and the average cost of a new house $12,500. Over the last century, a dollar's purchasing power has declined over 95 percent — i.e., it won't buy what a nickel did in 1909.

What causes inflation? The public hears various explanations from the establishment media — that oil's rising cost causes inflation, since nearly all industry sectors use it; or that inflation is the fault of American workers demanding wage increases, which has a ripple effect throughout the economy. In other words, Joe tells his employer, "Boss, my wife's expecting. How about a raise?" The boss says, "Joe, the only way I can afford that is by raising our prices — I'll have to pass the cost on to our customers." Then firms doing business with Joe's company say, "Since you've raised your prices, we'll have to raise ours." And so, all across America, prices rise because "greedy" Joe, and millions like him, asked for a raise.

Furthermore, the public has been lulled into believing that inflation is inevitable, like "death and taxes." Indeed, based on the Consumer Price Index (CPI), the broad index used to measure the price of goods and services, that seems true. America has experienced general price increases every year since 1955, without exception.

But as we can easily prove, inflation is not inevitable. Figure 1 depicts American price levels from 1665 to the present. Note there was no significant increase for the first 250 years. Little blips upward are on the graph, as during the American Revolution, War of 1812, and Civil War, when the United States issued large quantities of paper money to pay for those conflicts. Of course, increasing the supply of money (which is what inflation really is) diminishes its value, causing prices to rise. But notice that, after the wars, money always returned to its normal value. A dollar in 1900 was worth the same as in 1775; there had been no net increase in the cost of living since George Washington's day. Throughout this time, Americans asked for, and received, wage increases, without causing prices to rise overall.

Figure 1 Inflation GraphBut look at the graph's right side. During World War I, our currency inflated, but instead of resuming its normal value afterwards, it continued inflating out of sight. American money, relatively stable for 250 years, began to rapidly and permanently lose its value. This did not happen by chance; every effect has a cause. Around the time of World War I, something significant must have happened to induce this transformation. As we shall see, the cause of this transformation has nothing to do with Joe and others who, suffering from the effects of inflation, asked for a raise.

The Bankers' Beast

The change came from a single factor: creation of the Federal Reserve in 1913. Though most Americans have heard of it, few know much about it.

Ben Bernanke is current chairman of the Federal Reserve Board; Alan Greenspan held that position from 1987 to 2006. The Fed chairman has been called America's economic czar, because he and the board set U.S. interest rates. This in turn impacts the stock market's direction. If interest rates rise, CDs and other interest-bearing securities appear more profitable, causing money to flow out of the riskier stock market. But if interest rates fall, investors tend to return to stocks (the recent meltdown notwithstanding). Mutual fund managers try to stay ahead of the curve; when the Fed chairman holds a news conference, their fingers are often poised over their "buy" and "sell" buttons, hoping the chairman will reveal some hint about the direction of interest rates.

The Fed was established when Congress passed the Federal Reserve Act in 1913. But the original legislation, containing the essential points of that act, was introduced by Senator Nelson Aldrich, front man for the banking community. Few today have heard of Aldrich, but many are familiar with billionaire Nelson Rockefeller, who was Gerald Ford's vice president, long New York's governor, and one of America's richest men. His full name: Nelson Aldrich Rockefeller — named for his grandfather, Nelson Aldrich. Aldrich's daughter married John D. Rockefeller, Jr., and his son Winthrop served as chairman of the Rockefellers' Chase National Bank. Long associated with America's richest family, when Nelson Aldrich spoke on Capitol Hill, insiders knew he was acting for the Rockefellers and their allies in high finance.

The legislation he introduced in the Senate, which became the basis of the Federal Reserve System, was not written by him. It was crafted by several of the world's richest bankers, at a secret nine-day meeting in 1910, at a private club on Jekyll Island off the Georgia coast. This is well documented. The first reporter to break the Jekyll Island story was B.C. Forbes, founder of Forbes magazine.

Many years ago, Citibank was called National City Bank, and was largely controlled by the Rockefellers. Its president, Frank Vanderlip, attended the Jekyll Island meeting and discussed it in The Saturday Evening Post 25 years later:

There was an occasion near the close of 1910 when I was as secretive, indeed as furtive, as any conspirator.... I do not feel it is any exaggeration to speak of our secret expedition to Jekyll Island as the occasion of the actual conception of the Federal Reserve System.... We were told to leave our last names behind us. We were told further that we should avoid dining together on the night of our departure. We were instructed to come one at a time and as unobtrusively as possible to the terminal of the New Jersey littoral of the Hudson, where Senator Aldrich's private car would be in readiness, attached to the rear end of the train for the South. Once aboard the private car, we began to observe the taboo that had been fixed on last names.... Discovery, we knew, simply must not happen. If it were to be discovered that our particular group had got together and written a banking bill, that bill would have no chance whatever of passage by Congress.

Attending this meeting were agents from the world's three greatest banking houses: those of John D. Rockefeller, J.P. Morgan, and the Rothschilds. Together they represented an estimated 25 percent of the world's wealth. Acting for the Rockefellers were Senator Aldrich and Frank Vanderlip. Representing the Morgan interests were: Benjamin Strong, head of J.P. Morgan's Bankers Trust Company; Henry Davison, senior partner in J.P. Morgan & Co.; and Charles Norton, head of Morgan's First National Bank of New York. But the most important figure, credited with running the meeting, was Paul Warburg, who belonged to a prominent German banking family associated with the Rothschilds. The latter, the world's most powerful banking dynasty, had grown rich by establishing central banks that loaned money to European countries. Its patriarch, Amschel Mayer Rothschild, said: "Permit me to issue and control the money of a nation, and I care not who makes its laws."

In 1902, Paul Warburg came to America, intending to establish a similar central bank in the United States. Shortly after immigrating, he became a partner in Kuhn, Loeb, & Co., the Rothschilds' powerful banking satellite in New York City.

The Rothschilds had long been linked to America's two foremost banking families, the Rockefellers and Morgans. They had provided seed money for John D. Rockefeller's Standard Oil Company, and had influenced the Bank of England to bail out J.P. Morgan with a low-interest loan of 800,000 pounds, when his firm was verging on collapse in 1857.

The axis of Warburg/Rothschild, Morgan and Rockefeller, and their Wall Street confederates, became known as the "Money Trust." It worked in unison to force a central bank on America. In 1907, Morgan, who controlled numerous newspapers, began a false rumor concerning the insolvency of a rival bank, the Trust Company of America. The rumor led to a drastic run on the bank by depositors. This was part of the frenzy that historians call the Panic of 1907. Subsequently, Morgan's and Rockefeller's newspapers clamored for a central bank to prevent further crises; Senator Aldrich echoed the call in Congress; and Paul Warburg traveled the country lecturing on why the change was needed.

All this materialized in the Federal Reserve, which ultimately resulted from the legislation, penned on Jekyll Island, that Senator Aldrich introduced. Partly because of the senator's well-known ties to Wall Street, Congress never passed the Aldrich Bill itself. But the bankers gained acceptance of a very similar act, the Glass-Owen Bill, much of which was copied word-for-word from the Aldrich Bill.

On December 23, 1913, when Congress was eager to adjourn for Christmas, the Glass-Owen Bill passed, officially creating the Federal Reserve System. This name itself had been carefully chosen to deceive Americans. While "Federal" implied public control, it is in fact owned by private shareholders. "Reserve" suggested it would hold reserves to protect banks, but it has no hard assets — only bonds and other instruments of debt, and, as we will see, "fiat money," created from nothing. "System" implied its power would be diffuse (through 12 regional Federal Reserve banks), whereas actual power would be centralized in the Board and the New York Fed with its powerful Open Market Committee.

Monetary Motives

Why did the bankers want the Fed? Whom do you suppose President Woodrow Wilson named first vice chairman of the Federal Reserve Board (a position from which national interest rates would be set)? Paul Warburg. Who was first head of New York Fed, the system's nucleus? Benjamin Strong. Thus the very men who had secretly planned the bank now controlled it. The foxes were running the henhouse. At the time, neither Congress nor the public had any inkling of the Jekyll Island meeting.

Paul Warburg's annual salary at Kuhn, Loeb, & Co. had been $500,000, the equivalent of well over $10 million in today's dollars. He relinquished that for a Federal Reserve Board position that paid only $12,000. Was it altruistic patriotism that tempted Warburg to make this transition? Or was it because $500,000 paled in comparison to the countless millions he could make, for himself and his associates, by controlling American interest rates, and thus making the stock market rise or fall at will?

Charles Lindbergh, Sr., father of the famous aviator, was a distinguished member of the U.S. House of Representatives. Congressman Lindbergh helped lead the fight against the Federal Reserve Act. In December 1913, he declared on the floor of the House:

This act establishes the most gigantic trust on Earth. When the President signs this act the invisible government by the money power [Lindbergh here refers to the Rothschild-Rockefeller-Morgan alliance], proven to exist by the money trust investigation, will be legalized. The money power overawes the legislative and executive forces of the nation. I have seen these forces exerted during the different stages of this bill. From now on depressions will be scientifically created. The new law will create inflation whenever the trust wants inflation. If the trust can get a period of inflation, they figure they can unload stocks on the people at high prices during the excitement and then bring on a panic and buy them back at low prices. The people may not know it immediately, but the day of reckoning is only a few years removed.

Lindbergh's words were prophetic. Did inflation follow the Fed's establishment? Yes; Figure 1 graphically proves the impact on price levels. Were stocks unloaded on the people at high prices, then bought back at low prices after a panic? Yes. The "day of reckoning" Lindbergh predicted came with "Black Thursday" and the Great Crash of 1929.

The October 1929 stock market collapse wiped out millions of small investors, but not the Money Trust's insiders, who had already exited the market. Biographers attribute this to their fiscal "wisdom." But fiscal foreknowledge, especially of the Federal Reserve policy they were controlling, is more like it. The Fed increased the discount rate from 3.5 percent in January of that year to 6 percent in late August. While the Fed was not the only tool used to precipitate the crash, it was one of the most preeminent. Senator Robert Owen, who cosponsored the Glass-Owen Bill that created the Fed, later testified before the House Committee on Banking and Currency:

The powerful money interests got control of the Federal Reserve Board through Mr. Paul Warburg, Mr. Albert Strauss, and Mr. Adolph C. Miller.... The same people, unrestrained in the stock market, expanding credit to a great excess between 1926 and 1929, raised the price of stocks to a fantastic point where they could not possibly earn dividends, and when the people realized this, they tried to get out, resulting in the Crash of October 24, 1929.

Congressman Louis McFadden, chairman of the House Committee on Banking and Currency from 1920 to 1931, said of the crash: "It was not accidental. It was a carefully contrived occurrence. The international bankers sought to bring about a condition of despair here so that they might emerge as rulers of us all." McFadden stated further: "When the Federal Reserve Act was passed, the people of these United States did not perceive that a world banking system was being set up here — a superstate controlled by international bankers acting together for their own pleasure."

Curtis Dall, son-in-law of President Franklin D. Roosevelt, was the syndicate manager for Lehman Brothers. He was on the floor of the New York Stock Exchange on the day of the crash. He said of it: "Actually, it was the calculated 'shearing' of the public by the World Money powers." Afterwards, the Money Trust moved back into the market — exactly as Congressman Lindbergh had predicted. They bought up stocks that once sold for $10 per share at $1 per share, expanding their ownership of corporate America.

Something From Nothing

But stock market manipulation was not the only purpose behind the Federal Reserve. Another was creating money from nothing. The book that best explains this, and the Fed itself, is G. Edward Griffin's The Creature From Jekyll Island.

As nearly everyone knows, the U.S. government is very expensive. The federal deficit for 2008 was $455 billion. This means that, on an average day, the government spent over $1 billion more than it took in.

How does the government get money? Chiefly from taxes and the sale of government bonds. (The latter is a poor funding method, since money from bonds must be repaid later with interest.) But these revenues never come close to satisfying the federal budget's demands.

Still, despite insufficient income, the government always meets its obligations. It continues to pay federal employees, defense contractors, Social Security and Medicare recipients, etc. How does the government manage this?

It happens through a little-known mechanism. We'll borrow from an illustration given by Griffin. Let's say that, this week, the federal government is short one billion dollars needed to pay its employees. It sends a Treasury official to the Federal Reserve building, where a Fed officer literally writes out a check for $1 billion to the U.S. Treasury. This check, however, is not based on any assets the Fed actually holds. It is "fiat money," created from nothing. If an American citizen wrote a check without assets to back it up, he'd be jailed. But for the Federal Reserve, it's perfectly legal. The technical term the Fed uses for this is "monetizing the debt."

Warburg and his accomplices knew that fiat money would give the government the potential to spend without limit. The banking cartel was, and still is, intimately linked to corporations that did business with the U.S. government. This meant these corporations (in modern culture, Halliburton, Bechtel, AT&T, etc.) could earn virtually unlimited revenues from government contracts.

But the mechanism also benefited the bankers directly. As Griffin notes, what do you suppose the federal employees will do with that billion dollars in salary? Deposit it in their banks. How does a bank make profits? By loaning out deposited money. The more money in, the more it can loan. Thus, out of nothing, the Fed has created a billion loanable dollars for the banks.

Furthermore, this billion automatically becomes ten billion, because under Federal Reserve rules, a bank need only keep 10 percent of deposits in reserve. For every dollar deposited, nine may be loaned. Thus the Fed's creation of $1 billion from nothing actually manufactures an additional $9 billion in loanable money for the banks.

In Europe, the Rothschilds had perfected this system of fabricating bank deposits through central banks. Warburg largely designed the Federal Reserve from that model. For the bankers, the system meant countless profits, but for the rest of us, endless inflation. Why? Because every time the Fed creates dollars from nothing, it increases the amount of money in America, thereby decreasing money's value.

A textbook example of inflation struck Germany in the early 1920s. Defeated in World War I, Germany was compelled to pay the Allies massive reparations. To meet this obligation, it printed huge quantities of money. This decreased the value of German currency so badly that by November 1923, a loaf of bread cost 80 billion marks. People carted paper money around in wheelbarrows; some used it as fuel for stoves.

Whenever the Fed "monetizes" the debt, it does the same thing as Germany, only on a smaller scale. In today's high-tech world, of course, printing money is no longer necessary; the Fed can simply create money electronically, but the inflationary impact is the same. That is why, following 250 years of stable prices, we've had pernicious inflation since the Fed's birth in 1913.

Incidentally, Washington politicians love this system. By letting the Fed finance their expenditures with money made from nothing, politicians know they can spend without raising taxes. Tax increases are a "kiss of death" at reelection time (as President George Bush, Sr. learned in 1992 after voters rejected him for breaking his pledge of "Read my lips, no new taxes"). When the Fed produces more currency, making prices rise, who do we blame? Not the Fed. Not politicians. Instead, we blame the local retail store. "Why are you guys jacking up your prices?" Or we blame the candy company for making smaller chocolate bars, or the cereal company for putting less corn flakes in the box. But these businesses are simply trying to cope with the same dilemma as we are: inflation. The culprit is the Federal Reserve, and the problem is not that prices are going up, but that money's value is going down.

George Bush, Jr. waged war against Iraq without increasing taxes, and even introduced new tax credits and rebates. How did he manage this? Instead of raising taxes like his father, he had the Fed largely finance the war with fiat currency. This massive inflation caused the cost of food, energy, college tuition — everything — to soar.

Actually, inflation is a tax, a hidden one the public generally doesn't perceive as such.

A Well-coordinated Plot

After developing this scheme, the bankers still faced a problem. The billions deposited in their banks, created from nothing, still belonged to depositors. To make it profitable, the bankers had to loan it to someone.

They wanted to loan the money especially to one man: Uncle Sam — right back to the government through which they had it manufactured. Why? Because Uncle Sam would borrow astronomically more than individuals or businesses, and unlike the latter two, could always guarantee repayment.

Government borrowing is generated through sale of bonds. The Federal Reserve was empowered to buy and sell U.S. government bonds. Who would purchase those securities from the Fed? To a great extent, the Money Trust's own banks and investment firms. We thus see yet another motive for the Fed: interest on government loans.

But the Jekyll Island bankers still had a problem. How would America pay back all the interest on those loans? In 1913, the U.S. government had few revenue sources; its largest was tariffs collected on foreign imports.

The bankers' solution? Income tax. Though now an accepted way of life, income tax was not always around. The original U.S. Constitution excluded it; in 1895, the Supreme Court ruled it would be unconstitutional.

Therefore the only way the Money Trust could establish income tax was by legalizing it through a constitutional amendment. The senator who introduced that amendment in Congress? Nelson Aldrich - the same senator who introduced the incipient Federal Reserve legislation.

Why did Americans accept income tax? Because it was originally only one percent of a person's income, for salaries under $20,000 (the equivalent of over $400,000 in today's dollars). On Capitol Hill, the tax's supporters issued assurances it would never go up. So patriotic Americans said: "If Uncle Sam needs one percent of my salary, and I can always keep the rest, it's OK by me!"

But we all know what happened. Congress later dolefully informed Americans it needed to raise taxes a smidge. A few smidges later and, depending on bracket, we're losing 15 to 33 percent of our income to federal tax.

It was a long-range plan.

Some may object that rich bankers would never have wanted an income tax. After all, it supposedly "soaks the rich": the wealthier you are, the more you pay. It's true that the income tax structure is graduated. If an American today earns $100,000 or $200,000 per year, he or she usually owes lots of tax. But not the super-rich. The Warburg-Rockefeller-Morgan axis had no intention of paying income tax.

When Nelson Rockefeller sought to become Gerald Ford's vice president, he had to disclose his tax returns. These revealed that in 1970, the billionaire hadn't paid one cent of income tax. Likewise, the Senate's Pecora Hearings of 1933 discovered that J.P. Morgan had not paid any income tax in 1931 and 1932.

How did the Money Trust escape taxes? Primarily by placing their assets in tax-free foundations. The Carnegie and Rockefeller foundations were already operational by the time income tax passed.

Let's review the scenario. In 1913, the bankers created the Federal Reserve, which not only gave them control over interest rates and thus the stock market, but empowered them to create billions of dollars from nothing, which they would then loan back to America. Also in 1913, the bankers installed the income tax, enabling them to exact repayment on these interest-bearing loans to the government.

Only one thing was still missing: a significant reason for America to borrow. In 1914, just six months after the Federal Reserve Act passed, Archduke Ferdinand was assassinated, triggering the start of World War I. The United States participated; as a result, our national debt grew from a manageable $1 billion to $25 billion. Ever since, America has been immersed in skyrocketing debt — now officially over $10 trillion.

The consolidation of power in Washington has also grown immensely, much to the benefit of the political and financial elites who hold the reins of power. Both a central bank and an income tax — particularly a graduated income tax that largely consumes the wealth of the middle class in the name of taxing the wealthy — are powerful tools for bringing about this consolidation. In fact, this is why Karl Marx, in his Communist Manifesto, called for both in his 10-step plan for establishing a communist state. Step 2 was: "A heavy progressive or graduated income tax." Step 5 was: "Centralization of credit in the hands of the State, by means of a national bank with state capital and an exclusive monopoly."

Thus, in 1913, the United States enacted two of Marx's conditions for a communist totalitarian state. The original Constitution excluded an income tax, which the Founding Fathers opposed. Concerning money, the Constitution declares (Article 1, Sec. 8): "Congress shall have the power to coin money and regulate the value thereof." The Federal Reserve Act transferred this authority from elected representatives to bankers.

In America today, many young couples work hard. Commonly, both spouses hold jobs. A young man might say: "When my great-grandfather came to this country, he worked only one job, but he owned a house, had seven kids, and his wife never worked outside the home. But me and Mindy, we're working two jobs, we have only one kid, and can barely pay the rent. What are we doing wrong?"

But it's hardly their fault. When great-grandpa came to America, he paid no income tax, and his dollar was stable; it didn't plummet in value every year as it does now.

But you'll be glad to know the bankers are sorry about the trouble they've caused. They realize people can't make ends meet, and they've found a solution: multiple credit cards. Can't afford this month's groceries? Just swipe some plastic. Of course, they will charge double-digit interest on that.

Thus the banking cartel created inflation and income tax, robbing us of our income; therefore we don't have enough to live on, forcing us to borrow from ... the banks.

The solution to the Fed? Get rid of it!

Graph Source: Robert Sahr, Oregon State University

See also "Creating 'Wealth': the Fed Shows No Reserve."








Written by James Perloff


Nearly all Americans know they are plagued by inflation. In 1962, a postage stamp cost four cents, a candy bar a nickel, a movie ticket 50 cents, and a pair of tennis shoes $5. A new imported Renault automobile cost $1,395, annual tuition at Harvard was $1,520, and the average cost of a new house $12,500. Over the last century, a dollar's purchasing power has declined over 95 percent — i.e., it won't buy what a nickel did in 1909.


What causes inflation? The public hears various explanations from the establishment media — that oil's rising cost causes inflation, since nearly all industry sectors use it; or that inflation is the fault of American workers demanding wage increases, which has a ripple effect throughout the economy. In other words, Joe tells his employer, "Boss, my wife's expecting. How about a raise?" The boss says, "Joe, the only way I can afford that is by raising our prices — I'll have to pass the cost on to our customers." Then firms doing business with Joe's company say, "Since you've raised your prices, we'll have to raise ours." And so, all across America, prices rise because "greedy" Joe, and millions like him, asked for a raise.

Furthermore, the public has been lulled into believing that inflation is inevitable, like "death and taxes." Indeed, based on the Consumer Price Index (CPI), the broad index used to measure the price of goods and services, that seems true. America has experienced general price increases every year since 1955, without exception.







Chuck Schumer Proves Beyond A Reasonable Doubt That He Is Un-American and shuould be removed from office and...

...and thrown in jail for the rest of his natrual life! (watch for Google to remove this video for terms of violation!)

I was down in Geneva county today getting a truck load of hay when Snell (the hay grower) made a comment that stuck with me all the way back to Ozark. In a general conversation I had answered a question with, among other words, the following: "...Things are getting bad out there..." And as I tried to continue, Snell interrupted with, "It's too late! Things are already bad!"
Well I guess I pretty much knew that for some time now but coming from Snell it suddenly had some real meaning to what is going on with our country...and it is bad; very bad!
Just one of a zillion (maybe just a million or so) contributors to our problems is the rhetoric coming from someone who swore to uphold the Constitution and disregarding that oath, wants to destroy the American way of life that was held together by that very same document written so many years ago. Here's Chuck Schumer, a U.S. Senator no less, speaking in tyrannical words that in the days that preceded the writing of that precious document he would have been hung; or at least tarred and feathered! ~ Norman E. Hooben
ps: When things go bad...I mean real bad, Do you know what you are going to do? Maybe you should go back a few days ago when I posted this Armed Revolution! Are you "in or out"? with forward by Storm'n Norm'n

Suicide Watch...who will take the leap?

Source: Wake Up America

Suicide Watch List (Part 1)

From The Marston Chronicles

We are witnessing the rarest thing you see in politics, a need for a political suicide watch list. It is very rare because few politicians are willing to commit political suicide by casting a vote that means they will lose the next election. Only tried and true ideologues do that. The strange thing is that ideologues are usually found in safe districts where they can vote their ideological convictions with impunity. Politicians in competitive districts can't afford the luxury of doing that. Yet here we are with dozens of Democrats seriously contemplating taking that leap off the ledge to a virtually certain political death.

The strangest thing of all is that several Democrats are teetering on the edge of the ledge outside their office and are announcing that they are definitely going to jump. The only thing we can do is to try and talk then down before they wind up bloody and smashed on the sidewalk below. There are 16 such Democrats that we need to try and save. The phone system at the Capitol is overloaded and it is hard to get through. Try faxing these 16 people before they do jump:

  1. John Boccieri (OH-16) - He apparently believes that a 10.73% percent margin even though McCain-Palin carried his district by 2.61% will provide enough of an updraft to allow him to land safely on his feet. Please fax his suicide prevention hotline at 202-225-3059 and urge him not to jump.
  2. Leonard Boswell (IA-3) - His suicide hotline fax number is 202-225-5608. No one is even trying to talk him off the ledge because they assume he is going to jump anyway even after injuring himself when he jumped last November. Explain to him that in a banner year for Republicans even a 14.25% margin is not good enough when Obama only carried his district by 9.37%.
  3. Alan Grayson (FL-8) - He apparently believes that because he is the wealthiest member of the House, he can do as he pleases and just buy re-election like he bought his seat in 2008. Fax his number at 202-225-0999 and explain that all the money in the world will not save him if he jumps a second time.
  4. Steven Kagen (WI-8) - Fax him at 202-225-5729 and explain that an 8.1% margin for both himself and Obama will not save him if he jumps again in a year like this one. Surely as a doctor he knows how much damage jumping will cause to himself and others.
  5. Mary Jo Kilroy (OH-15) - Kilroy was here but will not be here next year if she jumps a second time. Fax her at 202-225-3529 and ask her why she is doing this when she won by a miniscule 0.76% in a great year for Democrats when this will obviously be a great year for Republicans. Obama will not be on the ballot to help her like last time.
  6. Ann Kirkpatrick (AZ-1) - This poor woman actually thinks that because she got a 16.45% margin that she can safely jump. Fax her at 202-226-9739 and remind her that John McCain carried her district by 10.17%. Explain that she only got that margin because the previous Republican got caught with his hand in the cookie jar and that even the $6,000,000 she spent last time will not be enough to save her in a red state like Arizona this time if she jumps.
  7. Dan Maffei (NY-25) - This deluded man thinks that because he is from New York, the fire department will be there with a safety net a second time. Fax him at 202-225-4042 and explain that since the fire department is short staffed due the economy, it cannot help him this time. Add that even a 12.94% margin just won't cut it in a year like this one.
  8. Betsy Markey (CO-4) - Just because we talked her out of jumping last time does not mean we can save her if she jumps this time as she seems determined to do. Fax 202-225-5870 and ask her why she is so determined to do this when even John McCain carried her district. Tell her that you cannot support someone trying to commit suicide.
  9. Patrick Murphy (PA-8) - This guy really needs help because no one is trying to talk him out of jumping a second time. Fax him at 202-225-9511 and warn him that former Congressman Mike Fitzpatrick is standing behind him ready to give him a shove. Remind him that Fitzpatrick only lost by 1,518 votes in a really bad Republican year which this year will not be.
  10. William Owens (NY-23) - Surely he knows that he only got 48.35% of the vote last November because the Republican vote was split after the Party nominated someone even more leftist than him. Fax him at 202-226-0621to explain that Doug Hoffman is just waiting for him to jump a second time so he can attend his funeral.
  11. Gary Peters (MI-9) - This is another second time jumper who risks as all by doing it again when he only got a 9.45% margin. Remind him that Obama pulled a lot more votes than he did in his district and that a margin of less than 10% is not considered safe in a normal year let alone one like this one. You might still save him by faxing 202-226-2356.
  12. Chellie Pingree (ME-1) - This woman thinks all that Maine snow will break her fall. Remind her that both her Senators voted against this bill and she represents half their state. Point out that Obama got over twice the margin she did and that a 9.8% margin is not a safe margin in any year. You can fax her at 202-225-5590 and help her come to her senses before it is too late.
  13. Mark Schauer (MI-7) - Does this poor man actually think a 2.31% margin will save him when Obama got over twice that margin? Fax him at 202-225-6281 and remind him he is already 10 points behind in a poll. He got away with jumping once but doing so a second time is the kiss of death for a man in the 10th most vulnerable district in the country.
  14. Carol Shea-Porter (NH-1) - This woman must be a slow learner. She has already jumped once which resulted in the GOP targeting her for that vote so she wants to make sure she commits suicide this time? She has to know what the result will be when she is already 10 points behind in a poll. Fax 202-225-5822 and try dissuade her from doing this.
  15. John Tierney (MA-6) - He has to know that Scott Brown campaigned against this bill and got 57.4% of the voters in his district to agree with him. What is he thinking? Fax him at 202-225-5915 and tell him you are a member of the Scott Brown brigade and just like you worked for Scott Brown you will work for whichever of three men wins the Republican primary if he jumps again.
  16. Niki Tsongas - (MA-5) - She only got a 6.21% margin the last time she had Republican opposition. Scott Brown got 56.2% of the votes in her district and she is going to vote for this beast again? Fax her at 202-226-0771 and tell her you voted for Scott Brown for his opposition to this bill and advise her to wake up and smell the coffee.

Friday, March 19, 2010

Obama Care: Now Who Knows Better? 130+ Prominent Economists or the community organizer who is destroying America.

Source: National Review


Friday, March 19, 2010


130+ Economists Sign Letter Calling Health 'Reform' a Jobs Killer [John R. Graham]

House Minority Leader Boehner is circulating a letter signed by over 130 economists, addressed to the president and Congress, describing the catastrophic effects of the so-called "reform" to U.S. health care. Both I and my colleague Benjamin Zycher are signatories.

The letter focuses on the avalanche of new taxes and the resulting negative impact on capital investment and job growth. It also emphasizes that the "reform" will increase the cost of health care.

Highlighted text by Storm'n Norm'n

ECONOMISTS RESPOND TO WHITE HOUSE LETTER

Dear President Obama and Congress:

As early as this week, the House of Representatives will vote on the Senate-passed health care bill as well as a reconciliation package making changes to the bill. While Speaker Pelosi asserts that health care reform will create four million jobs, we disagree. In our view, the health care bill contains a number of provisions that will eliminate jobs, reduce hours and wages, and limit future job creation.

New Taxes. The bill raises taxes by almost $500 billion over ten years. A significant portion of these tax increases will fall on small business owners, reducing capital and limiting economic growth and hiring.

New and Increased Medicare Taxes. An increase in the Medicare payroll tax included in the bill will affect small businesses employing millions of Americans. Over time, higher payroll taxes will decrease wages for these employees. And a new Medicare tax on investment income such as interest, dividends, and capital gains proposed by President Obama and likely included in the bill will threaten jobs and decrease economic growth.

Employer Mandate. The bill will impose a tax of $2,000 per employee on employers with more than 50 employees that do not provide health insurance. The bill will also tax employers that offer health coverage deemed “unaffordable” by the government. These new taxes on employers will reduce employment or be passed on to workers in the form of lower wages or reduced hours.

In addition to constricting economic growth and reducing employment, the health care bill will increase spending on health care and will increase the cost of health coverage. The new and higher taxes on America’s small businesses and workers included in the bill are detrimental to job creation and economic growth, especially now given the fragile state of the economy. The Congress should instead enact a health care bill that will reduce spending on health care, reduce the cost of health coverage for every American, and that does not harm the economy or cost jobs.

Sincerely,

Adam Gifford Jr.

Professor and Chair

Department of Economics

California State University

Charles Calomiris

Henry Kaufman Professor of Financial Institutions Columbia University

Alan Viard

Resident Scholar

American Enterprise Institute

Charles N. Steele

Herman and Suzanne Dettwiler Chair in Economics

Assistant Professor

Dept. Economics and Business Administration Hillsdale College

* Institutional affiliations are provided for identification purposes only.

Alex Brill

Research Fellow

American Enterprise Institute

Christopher Douglas

Assistant Professor of Economics

University of Michigan, Flint

Allan Meltzer

Professor of Political Economy

Carnegie Mellon University

Coldwell Daniel III

Professor Emeritus of Economics

University of Memphis

Arthur A Fleisher III

Professor & Chair

Department of Economics

Metropolitan State College of Denver

David L. Kendall

Professor of Economics and Finance Chair

Department of Business and Economics University of Virginia's College at Wise

Barry Poulson

Professor of Economics

University of Colorado Boulder

David VanHoose

Herman W. Lay Professor of Private Enterprise

Baylor University

Benjamin Zycher

Senior fellow

Pacific Research Institute

Dennis Halcoussis

Professor of Economics

California State University, Northridge

J. Brian O'Roark

Associate Professor of Economics

Department of Finance and Economics

Robert Morris University

Derek Stimel

Assistant Professor of Economics

Menlo College

Brian Strow

BB&T Professor for the Study of Capitalism Associate Professor of Economics

Western Kentucky University

Diana Furchtgott-Roth

Senior Fellow

Hudson Institute

Bruce Bender

Professor

Lubar School of Business

University of Wisconsin-Milwaukee

Donald Booth

Professor of Economics

Chapman University

Don Bellante

Professor of Economics

University of South Florida

Dorla A. Evans

Professor of Finance

University of Alabama in Huntsville

Glenn Wilson

Associate Professor of Economics

Odessa College, Odessa, TX

Dorsey D. Farr

Partner

French, Wolf & Farr

Howard Baetjer

Lecturer

Department of Economics

Towson University

Douglas Holtz-Eakin

President

American Action Forum

Ivan Pongracic, Jr.

Associate Professor of Economics

Hillsdale College

Earl Grinols

Distinguished Professor of Economics

Department of Economics

Baylor University

J. Christopher Hughen

Associate Professor of Finance

Daniels College of Business

University of Denver

G. Michael Phillips

Professor of Finance, Real Estate, and Insurance College of Business and Economics

California State University, Northridge

James L. Doti

President and Donald Bren Distinguished Chair of Economics

Chapman University

Gary Wolfram

William Simon Professor of Economics and Public Policy

Hillsdale College

James F. Smith

Chief Economist

EconForecaster, LLC

Gene Smiley

Emeritus Professor of Economics

Marquette University

Jane Lillydahl

Professor Emerita

University of Colorado at Boulder

George J. Viksnins

Professor of Economics Emeritus

Georgetown University

John Bethune

Dorothy and K. D. Kennedy Chair of Business Barton College Wilson, NC

Gerald Gay

Chairman and Professor of Finance

Georgia State University

John Eckalbar

Professor of Economics

California State University, Chico

Gerald R. Jensen

Professor of Finance

Northern Illinois University

John P. Hoehn

Professor

Environmental and Natural Resource Economics

Michigan State University

John R. Graham

Director, Health Care Studies

Pacific Research Institute

Lester D. Taylor

Professor Emeritus of Economics

University of Arizona

John Merrifield

Professor of Economics

University of Texas at San Antonio

Marek Kolar

Assistant Professor

Ketner School of Business

Trine University

John Seater

Professor of Economics

North Carolina State University

Micha Gisser

Professor Emeritus of Economics

University of New Mexico

John Wicks

Professor Emeritus

University of Montana

Michelle Michot Foss

Chief Energy Economist and Head

Center for Energy Economics

Bureau of Economic Geology

Jackson School of Geosciences

University of Texas at Austin

Joseph S. DeSalvo

Professor of Economics

University of South Florida

Mike Schuyler

Senior Economist

Institute for Research on the Economics of

Taxation

Joseph Haslag

Professor of Economics, University of Missouri

Nancy Jay

Associate Professor of Finance

Mercer University

Joseph Zoric

Associate Professor of Economics MBA Director Franciscan University of Steubenville

Nikolai G. Wenzel

Wallace and Marion Reemelin Chair in Free-Market Economics

Assistant Professor of Economics

Hillsdale College

Judd W. Patton

Professor of Economics

Bellevue University

Owen Irvine

Associate Professor of Economics

Michigan State University

Kevin Hassett

Director of Economic Policy Studies and Senior Fellow

American Enterprise Institute

Phoebus J. Dhrymes

Edwin W. Rickert Professor of Economics

Columbia University

Lawrence Franko

Professor of Finance (ret.)

University of Massachusetts, Boston

College of Management

Paul Gregory

Cullen Professor of Economics

University of Houston

Michael C. Davis

Associate Professor

Missouri University of Science and Technology

Lee Ohanian

Professor of Economics

UCLA

Robert Dammon

Professor of Finance

Carnegie Mellon University

Paul H. Rubin

Samuel Candler Dobbs Professor of Economics

Emory University

Robert Genetski

President

Classicalprinciples.com

Richard Grant

Professor of Finance & Economics Lipscomb University

Robert Herren

Professor of Economics

North Dakota State University

Phillip Bryson

Professor of Economics

Brigham Young University

Robert Tamura

Professor of Economics

Clemson University

R. Ashley Lyman

Professor Emeritus of Economics and Statistics University of Idaho

Roger Meiners

Professor of Economics

University of Texas at Arlington

R. David Ranson

President and Director of Research, H. C. Wainwright & Co. Economics Inc.

Roger Leroy Miller

Center for University Studies

Arlington, TX

Richard Cebula

Editor

Journal of Regional Analysis and Policy Managing Editor

Journal of Economics and Finance Education

Sanjai Bhagat

Professor of Finance Director, Ph.D. Program Leeds School of Business University of Colorado Boulder

Richard E. La Near

Chair holder of Free Enterprise

School of Business

Missouri Southern State University

Sherry L. Jarrell

Professor of Practice in Finance and Economics

Schools of Business

Wake Forest University

Richard Vedder

Edwin and Ruth Distinguished Professor of Economics

Ohio University

Simon Hakim

Director, Center for Competitive Government Fox School of Business & Management

Professor of Economics Temple University

Robert D. Tollison

J. Wilson Newman Professor of Economics Clemson University

Stan Liebowitz

Ashbel Smith Professor of Economics Director

Center for the Analysis of Property Rights and Innovation School of Management University of Texas--Dallas

Stacie E. Beck

Associate Professor of Economics

University of Delaware

Thomas A. Rhee

Professor of Finance, California State University, Long Beach

Stephen Entin

President & Executive Director, Institute for Research on the Economics of Taxation

Thomas Carl Rustici

Assistant Professor of Economics

George Mason University

Stephen W. Pruitt

Arvin Gottlieb/Missouri Endowed Chair of Business Economics and Finance

Henry W. Bloch School of Business and Public Administration

University of Missouri—Kansas City

Timothy Mathews

Assistant Professor of Economics

Kennesaw State University

Steve Jackstadt

Professor Emeritus of Economics

University of Alaska Anchorage

Tom Lehman

Professor of Economics

College of Arts and Sciences

Indiana Wesleyan University

Steven E. Margolis

Professor of Economics

North Carolina State University

Tom Miller

Resident Fellow

American Enterprise Institute

Steve Parente

Associate Professor

Department of Finance Carlson School of Management

University of Minnesota

Tomas Philipson

Daniel Levin Professor of Public Policy Studies University of Chicago

Steven T. Call

Economics Professor Emeritus

Metropolitan State College

Denver, Colorado

William R. Dougan

Professor

John E. Walker Department of Economics

Clemson University

Steven N. Kaplan

Neubauer Family Professor of Entrepreneurship and Finance

University of Chicago Booth School of Business

William F. Ford

Former President

Federal Reserve Bank of Atlanta

Ted Day

Professor of Finance School of Management University of Texas at Dallas

Richardson, Texas

Marc W. Simpson Chairman, Department of Finance Northern Illinois University

Philip I. Levy

Resident Scholar

American Enterprise Institute

Dean R. Lillard

Senior Research Associate

Department of Policy Analysis and Management

Cornell University

Vernon L. Smith

Economic Science Institute

Chapman University

Frank Falero

Emeritus Professor of Economics

California State University

Anthony T. Lo Sasso, Professor Division of Health Policy and Administration School of Public Health University of Illinois at Chicago

Cory Krupp

Associate Professor of the Practice

Sanford School of Public Policy

Duke University

Christopher J. Conover Research Scholar

Center for Health Policy

Mark Pingle

Professor of Economics

President, Entrepreneurship Nevada

President, Society for the Advancement of Behavioral Economics

Associate Editor, Journal of Economic Behavior and Organization

Associate Editor, Journal of Socio-Economics

University of Nevada, Reno

John P. Cochran Dean School of Business Professor of Economics Metropolitan State College of Denver

Robert J. Rossana

Professor of Economics

Wayne State University

Robert D. Niehaus

Principal Economist

Robert D. Niehaus, Inc.

Richard L. Gordon

Professor Emeritus of Mineral Economics

The Pennsylvania State University

Scott Harrington

Professor of Health Care Management

University of Pennsylvania

Don Chance

Flores Chair of MBA Studies

Professor of Finance

Louisiana State University

R. Richard Geddes

Associate Professor

Department of Policy Analysis & Management

Cornell University

Antony Davies

Associate Professor of Economics

Duquesne University

Stephen A. Tolbert, Jr. Lecturer of Economics, Montgomery County Community College Blue Bell, PA

Thomas R. Saving University Distinguished Professor of Economics Texas A&M University

Larry Eubanks Associate Professor Department of Economics University of Colorado at Colorado Springs

Nathan J. Ashby

Assistant Professor of Economics University of Texas at El Paso

Jason E. Taylor

Professor of Economics

Central Michigan University

C. Thomas Howard

Professor, Reiman School of Finance

Daniels College of Business

University of Denver

Lawrence Southwick

Associate Professor Emeritus

University Research Scholar

University at Buffalo

Martin C. McGuire

Emeritus Heinz Professor

for Economics of Global Security

University of California-Irvine

John Murray Professor of Economics University of Toledo

King Banaian

Professor

Department of Economics

St. Cloud State University

Ronnie H. Davis

Vice President & Chief Economist

Printing Industries of America

DeVon L. Yoho

Associate Professor of Economics

Ball State University

William F. Shughart II

F.A.P. Barnard Distinguished Professor

Editor in Chief, Public Choice

Senior Fellow, The Independent Institute

President, Southern Economic Association

The University of Mississippi

Department of Economics

Gerry L. Suchanek

Department of Finance

University of Iowa

Susan K. Feigenbaum

Professor of Economics

University of Missouri-St. Louis