I have been asked by the Constitution Party to answer your recent email addressed to Dr. Chuck Baldwin with the subject line of Federal Reserve Question. I was Dr. Baldwin's Vice Presidential running mate in the recent election and I am currently Vice Chairman of the Constitution Party National Committee.

In the first part of your question you quote from a CP email which refers to the Federal Reserve as being 'run' by the international money folks and states that the FED does not have much oversight. You wonder about that since the Fed web site does not mention it nor does a Charles Osgood video about the FED.

The Constitution of the United States grants to Congress the right and duty to "coin money and regulate the value thereof (Article 1, Section . In other words, by law, the American people through their duly elected representatives are to have control of their own monetary system. Despite this, Congress in 1913 with its passage of the Federal Reserve Act passed control over the American monetary system to a cartel of 12 private banks called the Federal Reserve (The FED). Each Federal Reserve Bank in each of 12 regions is a separate corporation owned by commercial banks in its region. The stockholding commercial banks elect two-thirds of each Bank's nine member board of directors. The remaining three directors are appointed by the U.S. Federal Reserve Board. The Federal Reserve Board regulates the Reserve Banks, but direct supervision and control of each bank is exercised by its board of directors. The 12 regional FED Banks are listed as neither wholly owned government corporations under 31 U.S.C. 846 nor as mixed ownership corporations under 31 U.S.C. 856. Well then, who owns the FED Banks? Since they are privately held corporations they are not required to tell the American people, but many of their stockholders are foreign central banks and commercial banks such as the Rothschild Bank which has controlled the English monetary system since it established the Bank of England in 1694.

The FED is the Central Bank of the United States. Central Banks are private organizations set up to lend money to the governments of the world. Many people believe and there is much evidence for the proposition that our recent world-wide financial crisis is simply a move by the Central Banks to take over the entire world's financial system. For example in April 2008 then Secretary of the Treasury, Henry Paulson, issued what he called a blueprint for the FED's future. This document revealed in advance much of what has happened in the last few months. It also laid out a "blue print" for massive new FED powers such as transferring the following to FED control.

All banking charters in the United States including what were then non-members of the FED, like credit card companies such as Macy's and Home Depot which have traditionally had their own banks;
All mortgage companies and savings and loan companies, etc.;
The complete insurance industry which before the A.I.G. take-over had been left to the states (now regulation is at the Federal level);
The power to be the market stability regulator. This allows it to pump money into the market at will to manipulate and control it;
The power to take over the payment and settlement system of Wall Street i.e. the settlement of accounts between individual investors and their brokers, etc.

If these things were all that would be enough, but there are other reasons why we believe the FED is run by the international money folks. I quote from the New York Times of today Sunday, February 15, 2009, in a page 6 story about the new Secretary of the Treasury, Timothy F. Geithner. "Mr. Geithner, whose last job was head of the Federal Reserve Bank of New York, has spent his academic and professional life studying and implementing international financial policy". The Federal Government only has three ways to get the money that it needs to do what it does. It can raise it through taxes. It can borrow it from foreign governments such as China. It can have the FED create the money on its computers and deposit U.S. bonds in the FED in exchange for it. Current taxes are barely enough to pay the interest on the Federal debt so that won't work. Having the FED create the money will work but it is highly inflationary. Borrowing from China is the most acceptable way to fund the Federal deficit spending that we have seen for 50 or 60 years. When a corporation or a government has a principle creditor, that creditor wants a say in how the corporation or government conducts its affairs. Mr. Geithner is a China expert having spent much of his life there and is fluent in the Chinese language. Rumor has it that on the day of his big press conference announcing his financial 'plan' he spent several hours on the phone with officials from China. I might be wrong, but it is my belief that Mr. Geithner is in his job to make sure that China gets whatever it wants in exchange for buying American debt.

Now for the question of whether the FED has much U.S. oversight. Remember that not only is the FED a private corporation, but it doesn't even operate by normal corporate rules. True, the President appoints the FED chairman but he does so from a panel of people given to him from the FED itself. I quote from a headline in the Washington Post September 7, 2009, "Congress on sideline A.I.G. bailout without Congressional approval or knowledge". Congress wasn't even consulted before the FED spent 85 billion now 150 billion to bailout A.I.G. When Congress was intimidated into passing the bailout package known as TARP, it did so under extortion and threats of martial law and civil unrest. There is nothing now between taxpayer money and its total exploitation by the international financial system except thin air.

Perhaps it is more important to understand what money is and how it works than what the FED is. Money today is bank issued credit which must be repaid with interest. Let me explain. If you went to your bank to buy a home for say one hundred thousand dollars and the bank elected to loan that money, no bank official would go to his vault and withdraws one hundred thousand dollars in currency. Your bank would simply create the money, all of it, on its computer screen and transfer those computer numbers to another bank or mortgage holder. You must then repay this loan with interest over a period of time, usually 30 years. The principle repaid would cancel the account a little at a time and the interest would be profit to the bank. Should you default, the bank would then foreclose and take your home for which it has given nothing. The FED lowers interest rates and gets everyone in real estate and then engineers a financial collapse of the real estate market by contracting its own credit. This allows the FED to seize much of the real assets of the world through foreclosure or with bailout funds. It then converts the bailout funds into real estate, sound companies, commodities such as oil, gold, etc. It then hangs the whole sordid mess around the necks of the American taxpayer and homeowner by blaming it on the sub-prime mortgage collapse, and by telling the American people that these banks are too big to fail.

What would replace the FED? A sound money system as the Constitution requires. A sound money system is one backed by gold and silver. That doesn't mean that when you went to the store to get bread you would need a sack of gold. We would still have paper money but now that money would have to be backed up by gold and silver meaning that you could exchange your money for gold or silver if you so desired. There would be no reason to exchange your currency for gold or silver because the dollar would then be stable and there would be no inflation. This system would limit the Federal Government in what it would be able to do. Whether it wanted to fight a trillion dollar war or give money to the pharmaceutical industry through a prescription drug bill, it would have to ask, "How will we pay for this?" I have an article on the CP website entitled "What Should We Do To Save The American Economy" and I encourage you to go to www.constitutionparty.com (click on articles and then click archives) and read it. It's all there for the American people if we will just return to the Constitution.

Finally, I will tell you that the FED web site and Charles Osgood are not the only ones who do not tell you the truth about our monetary system. It is one of the most taboo subjects in all of the American media. In addition to the Constitution Party, only Ron Paul, a Republican, and Dennis Kucinich, a Democrat, have the courage to explain it to the American people. The Constitution Party's next National Committee meeting is in Newark New Jersey the weekend of June 11-13. We will have many fine speakers on this subject and I hope to see you there. Check our web site for details.

Thanks for your inquiry and I hope my rather long answer helps.

Darrell L. Castle
Constitution Party Vice Chairman