Central Bank Failures in the United States

A central bank is a financial institution given privileged control over the production and distribution of money and credit for a nation or a group of nations. In modern-day economics, the central bank is usually responsible for the development of monetary policy and the regulation of member banks. Many are unaware that the US has had three failed attempts at central banking. We will examine those failures and look ahead to the potential failure of the current system.

In today’s society, the central banks have now overstepped their boundaries and charters. The central banks are now working hand in hand with world governments to control monetary supply, interest rates, and the financial markets. In other words, the entire financial system, political agendas, and financial markets are now dependent on the money creation systems of the central banks. If central banks didn’t have the authority to create money out of thin air, the whole financial system as we now know it would crumble. It is our thesis that this outcome is right around the corner. The Federal Reserve Bank of the US, the European Central Bank, the Bank of England, the Bank Of Japan, the Peoples Bank Of China, and the Swiss National Bank are now pulling all the strings like the Wizard of Oz behind the curtain.

This banking cartel of deceit, debt, and greed now has the entire financial system depending on it to get us through this tremendous debt bubble that has been inflated for decades. Where is the proof that any of these institutions can maneuver a safe landing without causing major financial chaos? There isn’t any proof of this. The debt load will eventually matter. The implosion of this debt load will be devastating to the world economy not to mention the retirement accounts and savings accounts of citizens.

Central banks are not government agencies. Central banks are legal monopolies that are privileged to issue banknotes and cash. You can only kick the can down the road for so long before the debt load becomes so overwhelming that the financial system fails. With each of the three former central banks of the US collapsing after widespread allegations of fraud, the Federal Reserve’s time is limited. Yes, the US has had failed central bank attempts. We are now witnessing number four.

Robert Morris established America’s first central bank in 1782

During the Revolutionary War in 1782, Robert Morris established America’s first central bank. Robert Morris was a defense contractor and established America’s first central bank. This Bank of North America was privatized in 1785. In 1781, Congress established the position of Superintendent of Finance to oversee financial matters. Morris accepted the appointment as Superintendent of Finance and also served as Agent of Marine, from which he controlled the Continental Navy. Robert Morris was known as the Financier of the Revolution. Along with Alexander Hamilton and Albert Gallatin, he is widely regarded as one of the founders of the financial system of the United States. Robert Morris used The Bank of North America to siphon millions of the Treasury’s assets into his firm and the hands of his associates. After backlash, the bank was privatized and Morris escaped justice. The first central bank attempt in the US failed.

In 1811 we saw America’s second central bank

In 1811, twenty-one years after America founded the First Bank of United States. This attempt was the second central bank attempt here in the US. Thomas Jefferson viewed it as a vehicle for speculation, financial manipulation, and corruption, expiring its charter soon after. Thomas Jefferson opposed the creation of the First Bank of the United States because he believed that such a centralized institution was not beneficial to his ideal of an agrarian lifestyle. He also believed that the United States Congress did not have the constitutional authority to establish such an institution. He is famous for having said that the banking industry as a whole was “an infinity of successive felonious larcenies.” Jefferson pointed out that the US Constitution did not give Congress the power to create a national bank.

“When I speak comparatively of the paper emission of the old Congress and the present banks, let it not be imagined that I cover them under the same mantle. The object of the former was a holy one; for if ever there was a holy war, it was that which saved our liberties and gave us independence. The object of the latter is to enrich swindlers at the expense of the honest and industrious part of the nation.”

Thomas Jefferson expired the bank’s charter and the second central bank attempt in the US failed.

In 1816 America’s third central bank is created

In 1816 it was James Madison’s turn to try and establish a central bank. The third central bank here in the US was called the Second Bank of the United States. Yet again, this institution was marked by corruption and foul play. According to FederalReserveHistory.org, the bank opened for business in Philadelphia in January 1817. It had much in common with its forerunner, including its functions and structure. It would act as a fiscal agent for the federal government. It held its deposits, made its payments, and helped it issue debt to the public. It would issue and redeem banknotes and keep state banks’ issuance of notes in check. Also, like its predecessor, the bank had a twenty-year charter and operated as a commercial bank that accepted deposits and made loans to the public, both businesses and individuals. Its board consisted of twenty-five directors, with five appointed by the president and confirmed by the Senate. The first president of the Second Bank of the United States was William Jones, a political appointee and a former secretary of the Navy who had gone bankrupt. Under Jones’s leadership, the bank first extended too much credit and then reversed that trend too quickly. The result was a financial panic that drove the economy into a steep recession.

Andrew Jackson distrusted banks on a personal level due to a failed land deal. His distrust of the Second Bank of the United States was also political, based on a belief that a federal institution such as the bank trampled on states’ rights. In addition, he felt that the bank put too much power in the hands of too few private citizens — power that could be used to the detriment of the government. The bank also lacked an effective system of regulation. In other words, it was too far outside the jurisdiction of Congress, the president, and voters. Andrew Jackson’s attack on its banker-controlled power touched a popular nerve with Americans, and when the Second Bank’s charter expired in 1836, it was not renewed.

Seventy-five years would go by before another attempt for a central bank was made. During that period, there were several banking crises. After the Panic of 1907, which triggered a nationwide suspension of payments and a deep recession, Congress established a commission to look into ways to improve how the banking system responded to the shocks. The commission’s findings led to the creation of the Federal Reserve System in 1913. Today the Fed and the other world central banks have become the lender of last resort. The Plunge Protection team has long been rumored to be the force behind the scenes saving the markets from implosion.

Central banks in the 1700s and 1800s were marred with fraud and corruption at the highest banking level. It is the same today, except the numbers involved are so much bigger. Does anyone truly understand what is involved today and what the consequences will be? I guess it’s a point of no return as our financial system is reliant on endless money creation and debt. Well, this money creation and debt will someday matter. It will destroy our dollar, our purchasing power, our savings, and our retirement accounts. The Federal Reserve run is long in the tooth. Our financial system will not look anything like this ten years from now. No one knows exactly what money will look like. What I do know, is that you better protect what you can now while you still have the chance. The world’s central banks are going down for the count.

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