Great American Ripoff
by F.W. Maisel
(p 154-157)
"Senator Robert L. Owen described the terrible cost of the Great depression through the mismanagement of the Federal Reserve:
The loss in production in the last ten years reached $220 billion in products and services which might have been enjoyed by the people under a management which had their interests at heart, and the country would be free of debt and heavy interest charges. These facts are proven by the record of the Federal Reserve Board of Governors.
Considering the inept policies of the Federal Reserve board, the Depression would probably have continued into the 1940s. However, the preparations for World War II provided a stimulus to the American economy. Roosevelt was determined that the board's policies would not interfere with the war effort. To restrict the Federal Reserve's interference in the financing of World War II, in April 1942, Roosevelt forced the Federal Reserve Board to peg the market for government securities.
According to monetary theory, Roosevelt's policy of pegging the interest rate low should have resulted in a runaway money supply and hyper-inflation. But it did not. This fact is important because it casts serious doubts on the very foundation of current Federal reserve policy. After war-time inflation subsided in 1948 without monetary interference by the Fed, the money supply declined of its own volition, and prices fell sharply.
Because of the power and forsight of a President who practiced pragmatic eonomics and did not blindly follow theory, post-war inflation was kept under control. Even with undusually high deficit spending, the American government financed the most expensive war in history at low interest rates. Business financed the retooling to a peace-time economy at low interest rates (prime commercial papaer was about 2%). In 1948, prices fell even though there was an abundat money supply. The important point to note is that during the war and post-war period, the availability of sufficient money at low interest rates allowed the economy to make the necessary adjustments and we had twenty years of low inflation. Under the Roosevelt plan, the Fed was not allowed to interfere with the market mechanism with a "tight-money" policy.
The truman era, 1945-1953, was characterized by a short but significant post-war inflation, the Korean adventure, and a restrained Federal reserve, which was obligated to assis the-Treasury in supporting the market for Untied States treasury bonds. Because of the restricted role of the federal Reserve, an adequate money supply was available for the conversion to peace.
During the period that the fed was under Treasury control, it made many attempts to extricate itself from these controls, for without the authority to manipulate interest rates, the Board was powrless. The Fed resented the restraints on its ability to invoke monetary controls and began a propaganda campaign to regain its independence. Threatening that inflation was going to ruin the nation, the Fed made inflation its battle cry. "...an engine of inflation." (Kross, p. 297)
...A great deal of the economic instability experienced in the United States since the Fed was organized was caused or aggravated by Fed policy. It has a consistent record of damaging the economy and failing the American public"
After I heard Bernanke, I couldn't resist this posting of one of my morning readings Nov 6 2010
Replies
Did You Know by F.W. Maisel 1983
*That a Roman farmer at the time of Christ financed his farm at 6% the City of Genoa explored the world at 1.5%, England built an empire at 3.5%, but the U.S. Government had to pay 15% interest to finance prosperity in 1981.
*That the Federal Reserve is the most powerful economic dictatorship outside the Kremlin.
*That a majority of the Federal Reserve Board members, including Chairman Volcker, were illegally appointed by Carter.
*That Paul Volcker, David Rockefeller's hand picked choice for Chairman of the Federal Reserve Board, was his personal aide at Chase Manhattan Bank.
*That the Federal Reserve Bank was David Rockefeller's Grandaddy's brain child.
*That every time Volcker increases interest rates one percent it means another $20 billion income to the financial industry.
*That Volcker granted a $300 billion subsidy to the financial industry in 1981.
*That Volcker's high -interest rip off cost every American family an average of $5,000 in 1981.
*That since Volker has been Chairman, America has suffered double-digit inflation, double-digit unemployment, double-digit interest rates and triple-digit budget deficits.
*That the National debt doubled during the last decade, the result of the Federal reserve Board's high interest rates and two programmed recessions.
*That the Fed has increased some interest rates as much as 3,000% since World war II.
*That the Federal Reserve Board intentionally programmed six recessions since World War II.
*That Paul Volcker is the most powerful man in America. He is the economic czar of the U.S. He can veto Presidential programs and Congressional legislation.
*That this is Paul Volcker's recession. He put nine million Americans out of work.
*That the Fed's war on inflation was a fraud--a camoulflage to justify tremendous increases in interest rates.
*That compared to Carter's sellout of the American public. Nixon's Watergate is peanuts.
Goodgrief, this is 2010 going on 2011, what the hell does Obama think is going to happen in the Pacific Region? Who the hell is in charge? Just because Mark Twain came here in 1866 doesn't mean it's relative to today. Our islands are pretty messed up with military contaminats, that's going to cause a problem for visitors and congenial defects until all Na Kanaka DNA living in Hawaii disintergrate. By then too, late like with what is happening to the Marshall'ee people.
Wow, this morning when I was reading my book, and at the same time listening to Bernanke, I knew something was wrong. So thanks for the response and the additional postings. It helps to see through muck!
I do wish we had more people that had the guts to slam on the forum with current issues and concern. Na Kanaka has so much to offer to the world.
I hear and read the same things we are talking about right here on this forum across the media, but it takes months before it really takes in our communities, by then we are on another platform. Ugh!
mahalo
I guess I got bored with all the back biting, underhanded, Na Kanaka comprehesive thinking and went abroad for more of 'what's happening' to try to understand how our leaders are going to create their latest projects which are Na Kanaka colleteral damage not just with the unborn (abortion) young children (poison dust DU) elder neglect (right to die blue ribbon panel), and now the actual Na Kanaka families (sustainable comprehensive planning). Oops forgot the fishes in the sea (Marine Spatial Planning).
If one can just skim through I'd appreciate the quick feed back--even if it's just to say high with some kind of youtube music.
http://www.truth-it.net/thomas_jefferson_warned_us.html
You Think You Know?
THOMAS JEFFERSON WARNED US
Thomas Jefferson Warned Us About the Dangers of Allowing A Central Bank to Create Our Currency and Now America is Feeling the Effects of the Global Banking Elite.
Thomas Jefferson warned us to never allow a central bank to operate within our borders. He knew of the dangers and wrote laws in the Constitution to protect us. The American revolution was a war against the British Empire and the Central Bank of England.
The Central Bank of England tried every way they could to keep the colonists in their debt and proclaim it illegal for them to create their own currency. The same imperialistic banking families that were active then have remained active and have been relentless in their pursuit of enslaving the people of this country and of the world.
Thomas Jefferson warned us but yet we managed to allow this infiltration to be brought in disguised as a way to bailout the country. First the Federal Reserve was created to bail us out of banking disasters. All this did was permanently give away our economic independence.
And now the bailouts keep showing up and every one of them is orchestrated to amass wealth for the imperialist regime that takes on the appearances of presidents, bankers, and multinational corporation owners. In reality, the same families are pulling the strings. They simply buy whomever or whatever will help them reach their goals.
http://www.worldviewweekend.com/worldview-times/article.php?article...
PAST PRESIDENTS HAVE WARNED US ABOUT THE DANGER AND CORRUPTION OF A CENTRAL BANK (THE FEDERAL RESERVE)
Posted: 12/09/08
I first published this article in March of 2008 but I am reposting it in light of all that is going on In America and the large number of new readers to our site.
Past Presidents Have Warned Us About The Danger and Corruption of A Central Bank (The Federal Reserve)
By Brannon Howse
Few Americans know the truth about the Federal Reserve. The reality is it is no more a part of the federal government than is Federal Express. The Federal Reserve is a private corporation run by private bankers.
Why should you care? Because as President Thomas Jefferson, President Andrew Jackson and President Woodrow Wilson all understood, a private central bank has the power to destroy our lives and steal our freedoms.
The U.S. Treasury, in connection with the Federal Reserve, has "loaned" billions of taxpayer dollars to banks here in the U.S. and around the world and there is no guarantee we will ever be re-paid. This is nothing more than the rich bankers taking care of their rich banking friends while creating further inflation that limits your buying power of essentials such as food and clothing. In other words, the injections of liquidity by the feds in the billions of dollars have caused you and me to be the recipients of a "hidden tax" through the debasement of our currency.
While many doubted my predictions, in 2007, on my national radio program, I predicted that the federal government, at the encouragement of the Federal Reserve, and with your tax dollars, would bail out many banks from their bad business decisions. I also predicted that major banks would fail and that massive inflation was to follow. I still believe the latter will occur.
As you will see from the Presidential warnings below, the expansion of an all powerful central government is created through the unconstitutional and self serving fiscal policies of a central banking system.
Americans had better wake up to what is going on and start electing state and federal officials that have the understanding of President Thomas Jefferson, President Andrew Jackson and President Woodrow Wilson.
Thomas Jefferson on the dangers of a central bank wrote:
If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation the banks and corporations that will grow up around them will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. Thomas Jefferson, President of the United States 1801-1809
Can you say corporate fascism? In my second book which was published in 1996, I warned that America was falling victim to corporate fascism. The American Heritage Dictionary defines corporate fascism as:
A philosophy or system of government that advocates or exercises dictatorship through the merging of state and business leadership.
What do you call the government backed bailout of numerous banks and corporations if not corporate fascism?
What do you call it when members of Congress and the President's Administration implement national and international policy based not on legislation but on "agreements"? These "agreements" create rules and regulations that are implemented without Congressional approval. Whether it is the creation of the Transatlantic Common Market or the North American Union, the players are the same and the losers are always hard working Americans.
These "agreements" undermine national sovereignty; destroy America's middle class and create more dependants for an ever increasing powerful central government. Meanwhile, huge American and multinational corporations reap huge financial profits while politicians have their campaign coffers filled so they can be guaranteed re-election. That is, until they decide to retire from "public service" only to be hired by the corporate titans they worked for while "serving" on Capitol Hill. Payback is a rich, former congressman making millions working in the "private sector".
Now you understand why President Thomas Jefferson in 1816 wrote, "I believe that banking institutions are more dangerous to our liberties than standing armies."
President Andrew Jackson Eliminated the Central Bank
In his "Farewell Address" on March 4, 1837, President Andrew Jackson warned about the dangers of a central bank that created fiat currency. Jackson was a strong believer in the "hard assets" of gold and silver as a currency.
The Second Bank of the United States was a corporation chartered by Congress to provide a national paper currency and manage the government's finances. Like Thomas Jefferson, Jackson believed such a bank to be dangerous and unconstitutional. In 1832, he vetoed a bill to extend the Bank's charter beyond its scheduled expiration in 1836. Jackson's veto message counter posed the virtuous plain people against the Bank's privileged stockholders. The next year Jackson moved the federal government's deposits from the Bank to state-chartered banks, triggering a brief financial panic and prompting the Senate to censure him in 1834. Undeterred, Jackson launched a broader assault against all forms of government-granted privilege, especially corporate charters. His Farewell Address in 1837 warned of an insidious "money power."
(see source by click here)
· "The severe lessons of experience will, I doubt not, be sufficient to prevent Congress from again chartering such a monopoly, even if the Constitution did not present an insuperable objection to it. But you must remember, my fellow-citizens, that eternal vigilance by the people is the price of liberty, and that you must pay the price if you wish to secure the blessing. It behooves you, therefore, to be watchful in your States as well as in the Federal Government. The power which the moneyed interest can exercise, when concentrated under a single head and with our present system of currency, was sufficiently demonstrated in the struggle made by the Bank of the United States."
· "The distress and sufferings inflicted on the people by the bank are some of the fruits of that system of policy which is continually striving to enlarge the authority of the Federal Government beyond the limits fixed by the Constitution. The powers enumerated in that instrument do not confer on Congress the right to establish such a corporation as the Bank of the United States, and the evil consequences which followed may warn us of the danger of departing from the true rule of construction and of permitting temporary circumstances or the hope of better promoting the public welfare to influence in any degree our decisions upon the extent of the authority of the General Government."
· "… if you had not conquered, the Government would have passed from the hands of the many to the hands of the few, and this organized money power from its secret conclave would have dictated the choice of your highest officers and compelled you to make peace or war, as best suited their own wishes. The forms of your Government might for a time have remained, but its living spirit would have departed from it."
· "The paper system being founded on public confidence and having of itself no intrinsic value, it is liable to great and sudden fluctuations, thereby rendering property insecure and the wages of labor unsteady and uncertain. The corporations which create the paper money can not be relied upon to keep the circulating medium uniform in amount. In times of prosperity, when confidence is high, they are tempted by the prospect of gain or by the influence of those who hope to profit by it to extend their issues of paper beyond the bounds of discretion and the reasonable demands of business; and when these issues have been pushed on from day to day, until public confidence is at length shaken, then a reaction takes place, and they immediately withdraw the credits they have given, suddenly curtail their issues, and produce an unexpected and ruinous contraction of the circulating medium, which is felt by the whole community. The banks by this means save themselves, and the mischievous consequences of their imprudence or cupidity are visited upon the public."
* Our growth has been rapid beyond all former example in numbers, in wealth, in knowledge, and all the useful arts which contribute to the comforts and convenience of man, and from the earliest ages of history to the present day there never have been thirteen millions of people associated in one political body who enjoyed so much freedom and happiness as the people of these United States. You have no longer any cause to fear danger from abroad; your strength and power are well known throughout the civilized world, as well as the high and gallant bearing of your sons. It is from within, among yourselves--from cupidity, from corruption, from disappointed ambition and inordinate thirst for power--that factions will be formed and liberty endangered. It is against such designs, whatever disguise the actors may assume, that you have especially to guard yourselves.
You can read President Jackson's entire Farwell Address at this link:
President Woodrow Wilson Establishes the Federal Reserve
Sadly, President Woodrow Wilson did not read and heed the warning of President Andrew Jackson and in 1913, President Wilson signed the legislation that created the Federal Reserve. Years later, President Wilson acknowledged the harm he had brought to America.
A great industrial nation is controlled by its system of credit. Our system of credit is privately concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men...We have come to be one of the worst ruled, one of the most completely controlled and dominated, governments in the civilized world-no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and the duress of small groups of dominant men..
If the current financial storm turns into a tsunami the central bankers and their politicians will be either relieved of duty by angry Americans that demand a truly free, free-enterprise system or they will be entrenched with even greater power and America will have fully embraced corporate fascism which is a form of socialism.
Distributed by www.worldviewweekend.com
By Brannon Howse
Email: Brannon@worldviewweekend.com
**************
It appears that the American people will have to take back their government and recreate another Federal Banking System less the private pirateers..............who purchased the stocks of the Federal Reserve on President Cleveland's Watch................yes it is true..........
There was a special law enacted to protect the privacy of the investors of the Federal Banking System; however, many of have posted the names over time with references to articles about who they are:
http://land.netonecom.net/tlp/ref/federal_reserve.shtml
OWNERSHIP OF THE FEDERAL RESERVE
Most Americans, if they know anything at all about the Federal Reserve, believe it is an agency of the United States Government. This article charts the true nature of the "National Bank."
Chart 1
Source: ** Federal Reserve Directors: A Study of Corporate and Banking Influence ** - - Published 1976
Chart 1 reveals the linear connection between the Rothschilds and the Bank of England, and the London banking houses which ultimately control the Federal Reserve Banks through their stockholdings of bank stock and their subsidiary firms in New York. The two principal Rothschild representatives in New York, J. P. Morgan Co., and Kuhn, Loeb & Co. were the firms which set up the Jekyll Island Conference at which the Federal Reserve Act was drafted, who directed the subsequent successful campaign to have the plan enacted into law by Congress, and who purchased the controlling amounts of stock in the Federal Reserve Bank of New York in 1914. These firms had their principal officers appointed to the Federal Reserve Board of Governors and the Federal Advisory Council in 1914. In 1914 a few families (blood or business related) owning controlling stock in existing banks (such as in New York City) caused those banks to purchase controlling shares in the Federal Reserve regional banks. Examination of the charts and text in the House Banking Committee Staff Report of August, 1976 and the current stockholders list of the 12 regional Federal Reserve Banks show this same family control.
N.M. Rothschild , London - Bank of England
______________________________________
| |
| J. Henry Schroder
| Banking | Corp.
| |
Brown, Shipley - Morgan Grenfell - Lazard - |
& Company & Company Brothers |
| | | |
--------------------| -------| | |
| | | | | |
Alex Brown - Brown Bros. - Lord Mantagu - Morgan et Cie -- Lazard ---|
& Son | Harriman Norman | Paris Bros |
| | / | N.Y. |
| | | | | |
| Governor, Bank | J.P. Morgan Co -- Lazard ---|
| of England / N.Y. Morgan Freres |
| 1924-1938 / Guaranty Co. Paris |
| / Morgan Stanley Co. | /
| / | \Schroder Bank
| / | Hamburg/Berlin
| / Drexel & Company /
| / Philadelphia /
| / /
| / Lord Airlie
| / /
| / M. M. Warburg Chmn J. Henry Schroder
| | Hamburg --------- marr. Virginia F. Ryan
| | | grand-daughter of Otto
| | | Kahn of Kuhn Loeb Co.
| | |
| | |
Lehman Brothers N.Y -------------- Kuhn Loeb Co. N. Y.
| | --------------------------
| | | |
| | | |
Lehman Brothers - Mont. Alabama Solomon Loeb Abraham Kuhn
| | __|______________________|_________
Lehman-Stern, New Orleans Jacob Schiff/Theresa Loeb Nina Loeb/Paul Warburg
- ------------------------- | | |
| | Mortimer Schiff James Paul Warburg
_____________|_______________/ |
| | | | |
Mayer Lehman | Emmanuel Lehman \
| | | \
Herbert Lehman Irving Lehman \
| | | \
Arthur Lehman \ Phillip Lehman John Schiff/Edith Brevoort Baker
/ | Present Chairman Lehman Bros
/ Robert Owen Lehman Kuhn Loeb - Granddaughter of
/ | George F. Baker
| / |
| / |
| / Lehman Bros Kuhn Loeb (1980)
| / |
| / Thomas Fortune Ryan
| | |
| | |
Federal Reserve Bank Of New York |
|||||||| |
______National City Bank N. Y. |
| | |
| National Bank of Commerce N.Y ---|
| | \
| Hanover National Bank N.Y. \
| | \
| Chase National Bank N.Y. \
| |
| |
Shareholders - National City Bank - N.Y. |
- ----------------------------------------- |
| /
James Stillman /
Elsie m. William Rockefeller /
Isabel m. Percy Rockefeller /
William Rockefeller Shareholders - National Bank of Commerce N. Y.
J. P. Morgan -----------------------------------------------
M.T. Pyne Equitable Life - J.P. Morgan
Percy Pyne Mutual Life - J.P. Morgan
J.W. Sterling H.P. Davison - J. P. Morgan
NY Trust/NY Edison Mary W. Harriman
Shearman & Sterling A.D. Jiullard - North British Merc. Insurance
| Jacob Schiff
| Thomas F. Ryan
| Paul Warburg
| Levi P. Morton - Guaranty Trust - J. P. Morgan
|
|
Shareholders - First National Bank of N.Y.
- -------------------------------------------
J.P. Morgan
George F. Baker
George F. Baker Jr.
Edith Brevoort Baker
US Congress - 1946-64
|
|
|
|
|
Shareholders - Hanover National Bank N.Y.
- ------------------------------------------
James Stillman
William Rockefeller
|
|
|
|
|
Shareholders - Chase National Bank N.Y.
- ---------------------------------------
George F. Baker
Chart 2
Source: ** Federal Reserve Directors: A Study of Corporate and Banking Influence ** - - Published 1983
The J. Henry Schroder Banking Company chart encompasses the entire history of the twentieth century, embracing as it does the program (Belgium Relief Commission) which provisioned Germany from 1915-1918 and dissuaded Germany from seeking peace in 1916; financing Hitler in 1933 so as to make a Second World War possible; backing the Presidential campaign of Herbert Hoover ; and even at the present time, having two of its major executives of its subsidiary firm, Bechtel Corporation serving as Secretary of Defense and Secretary of State in the Reagan Administration.
The head of the Bank of England since 1973, Sir Gordon Richardson, Governor of the Bank of England (controlled by the House of Rothschild) was chairman of J. Henry Schroder Wagg and Company of London from 1963-72, and director of J. Henry Schroder, New York and Schroder Banking Corporation, New York, as well as Lloyd's Bank of London, and Rolls Royce. He maintains a residence on Sutton Place in New York City, and as head of "The London Connection," can be said to be the single most influential banker in the world.
J. Henry Schroder
-----------------
|
|
|
Baron Rudolph Von Schroder
Hamburg - 1858 - 1934
|
|
|
Baron Bruno Von Schroder
Hamburg - 1867 - 1940
F. C. Tiarks |
1874-1952 |
| |
marr. Emma Franziska |
(Hamburg) Helmut B. Schroder
J. Henry Schroder 1902 |
Dir. Bank of England |
Dir. Anglo-Iranian |
Oil Company J. Henry Schroder Banking Company N.Y.
|
|
J. Henry Schroder Trust Company N.Y.
|
|
|
___________________|____________________
| |
Allen Dulles John Foster Dulles
Sullivan & Cromwell Sullivan & Cromwell
Director - CIA U. S. Secretary of State
Rockefeller Foundation
Prentiss Gray
------------
Belgian Relief Comm. Lord Airlie
Chief Marine Transportation -----------
US Food Administration WW I Chairman; Virgina Fortune
Manati Sugar Co. American & Ryan daughter of Otto Kahn
British Continental Corp. of Kuhn,Loeb Co.
| |
| |
M. E. Rionda |
------------ |
Pres. Cuba Cane Sugar Co. |
Manati Sugar Co. many other |
sugar companies. _______|
| |
| |
G. A. Zabriskie |
--------------- | Emile Francoui
Chmn U.S. Sugar Equalization | --------------
Board 1917-18; Pres Empire | Belgian Relief Comm. Kai
Biscuit Co., Columbia Baking | Ping Coal Mines, Tientsin
Co. , Southern Baking Co. | Railroad,Congo Copper, La
| Banque Nationale de Belgique
Suite 2000 42 Broadway | N. Y |
__________________________|___________________________|
| | |
| | |
Edgar Richard Julius H. Barnes Herbert Hoover
------------- ---------------- --------------
Belgium Relief Comm Belgium Relief Comm Chmn Belgium Relief Com
Amer Relief Comm Pres Grain Corp. U.S. Food Admin
U.S. Food Admin U.S. Food Admin Sec of Commerce 1924-28
1918-24, Hazeltine Corp. 1917-18, C.B Pitney Kaiping Coal Mines
| Bowes Corp, Manati Congo Copper, President
| Sugar Corp. U.S. 1928-32
|
|
|
John Lowery Simpson
- -------------------
Sacramento,Calif Belgium Relief |
Comm. U. S. Food Administration Baron Kurt Von Schroder
Prentiss Gray Co. J. Henry Schroder -----------------------
Trust, Schroder-Rockefeller, Chmn Schroder Banking Corp. J.H. Stein
Fin Comm, Bechtel International Bankhaus (Hitler's personal bank
Co. Bechtel Co. (Casper Weinberger account) served on board of all
Sec of Defense, George P. Schultz German subsidiaries of ITT . Bank
Sec of State (Reagan Admin). for International Settlements,
| SS Senior Group Leader,Himmler's
| Circle of Friends (Nazi Fund),
| Deutsche Reichsbank,president
|
|
Schroder-Rockefeller & Co. , N.Y.
- ---------------------------------
Avery Rockefeller, J. Henry Schroder
Banking Corp., Bechtel Co., Bechtel
International Co. , Canadian Bechtel
Company. |
|
|
|
Gordon Richardson
-----------------
Governor, Bank of England
1973-PRESENT C.B. of J. Henry Schroder N.Y.
Schroder Banking Co., New York, Lloyds Bank
Rolls Royce
Chart 3
Source: ** Federal Reserve Directors: A Study of Corporate and Banking Influence ** - - Published 1976
The David Rockefeller chart shows the link between the Federal Reserve Bank of New York, Standard Oil of Indiana, General Motors and Allied Chemical Corportion (Eugene Meyer family) and Equitable Life (J. P. Morgan).
DAVID ROCKEFELLER
- ----------------------------
Chairman of the Board
Chase Manhattan Corp
|
|
______|_______________________
Chase Manhattan Corp. |
Officer & Director Interlocks|---------------------
------|----------------------- |
| |
Private Investment Co. for America Allied Chemicals Corp.
| |
Firestone Tire & Rubber Company General Motors
| |
Orion Multinational Services Ltd. Rockefeller Family & Associates
| |
ASARCO. Inc Chrysler Corp.
| |
Southern Peru Copper Corp. Intl' Basic Economy Corp.
| |
Industrial Minerva Mexico S.A. R.H. Macy & Co.
| |
Continental Corp. Selected Risk Investments S.A.
| |
Honeywell Inc. Omega Fund, Inc.
| |
Northwest Airlines, Inc. Squibb Corporation
| |
Northwestern Bell Telephone Co. Olin Foundation
| |
Minnesota Mining & Mfg Co (3M) Mutual Benefit Life Ins. Co. of NJ
| |
American Express Co. AT & T
| |
Hewlett Packard Pacific Northwestern Bell Co.
| |
FMC Corporation BeachviLime Ltd.
| |
Utah Intl' Inc. Eveleth Expansion Company
| |
Exxon Corporation Fidelity Union Bancorporation
| |
International Nickel/Canada Cypress Woods Corporation
| |
Federated Capital Corporation Intl' Minerals & Chemical Corp.
| |
Equitable Life Assurance Soc U.S. Burlington Industries
| |
Federated Dept Stores Wachovia Corporation
| |
General Electric Jefferson Pilot Corporation
| |
Scott Paper Co. R. J. Reynolds Industries Inc.
| |
American Petroleum Institute United States Steel Corp.
| |
Richardson Merril Inc. Metropolitan Life Insurance Co.
| |
May Department Stores Co. Norton-Simon Inc.
| |
Sperry Rand Corporation Stone-Webster Inc.
| |
San Salvador Development Company Standard Oil of Indiana
Chart 4
** Federal Reserve Directors: A Study of Corporate and Banking Influence ** - - Published 1976
This chart shows the interlocks between the Federal Reserve Bank of New York J. Henry Schroder Banking Corp., J. Henry Schroder Trust Co., Rockefeller Center, Inc., Equitable Life Assurance Society ( J.P. Morgan), and the Federal Reserve Bank of Boston.
Alan Pifer, President
Carnegie Corporation
of New York
- ----------------------
|
|
- ----------------------
Carnegie Corporation
Trustee Interlocks --------------------------
---------------------- |
| |
Rockefeller Center, Inc J. Henry Schroder Trust Company
| |
The Cabot Corporation Paul Revere Investors, Inc.
| |
Federal Reserve Bank of Boston Qualpeco, Inc.
|
Owens Corning Fiberglas
|
New England Telephone Co.
|
Fisher Scientific Company
|
Mellon National Corporation
|
Equitable Life Assurance Society
|
Twentieth Century Fox Corporation
|
J. Henry Schroder Banking Corporation
Chart 5
Source: ** Federal Reserve Directors: A Study of Corporate and Banking Influence ** - - Published 1976
This chart shows the link between the Federal Reserve Bank of New York, Brown Brothers Harriman,Sun Life Assurance Co. (N.M. Rothschild and Sons), and the Rockefeller Foundation.
Maurice F. Granville
Chairman of The Board
Texaco Incorporated
- ----------------------
|
|
Texaco Officer & Director Interlocks ---------- Liggett & Myers, Inc.
- ------------------------------------ |
| |
| |
L Arabian American Oil Company St John d'el Ray Mining Co. Ltd.
O | |
N Brown Brothers Harriman & Co. National Steel Corporation
D | |
O Brown Harriman & Intl' Banks Ltd. Massey-Ferguson Ltd.
N | |
American Express Mutual Life Insurance Co.
| |
N. American Express Intl' Banking Corp. Mass Mutual Income Investors Inc.
M. | |
Anaconda United Services Life Ins. Co.
R | |
O Rockefeller Foundation Fairchild Industries
T | |
H Owens-Corning Fiberglas Blount, Inc.
S | |
C National City Bank (Cleveland) William Wrigley Jr. Co
H | |
I Sun Life Assurance Co. National Blvd. Bank of Chicago
L | |
D General Reinsurance Lykes Youngstown Corporation
| |
General Electric (NBC) Inmount Corporation
** Source: Federal Reserve Directors: A Study of Corporate and Banking Influence. Staff Report,Committee on Banking,Currency and Housing, House of Representatives, 94th Congress, 2nd Session, August 1976.
(Isaiah 33:22) For the Lord is our judge, the Lord is our lawgiver, the Lord is our king; he will save us.
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Who Owns and Controls the Federal Reserve?
by Dr. Edward Flaherty, University of Charleston
Is the Federal Reserve System secretly owned and covertly controlled by powerful foreign banking interests? If so, how? These claims, made chiefly by authors Eustace Mullins (1983) and Gary Kah (1991) and repeated by many others, are quite serious because the Fed is the United States central bank and controls U.S. monetary policy. By changing the supply of money in circulation, the Fed influences interest rates, affecting the mortgage payments of millions of families, causing the financial markets to boom or collapse, and prompting the economy to expand or to stumble into recession. Such awesome power presumably would be used to benefit the U.S. economy. Mullins and Kah both argued that the Federal Reserve Bank of New York is owned by foreigners. Although the New York Fed is just one of twelve Federal Reserve banks, controlling it, they claimed, is tantamount to control of the entire System. Foreigners use their command of the New York Fed to manipulate U.S. monetary policy for their own and, as Kah asserted, to further their global political goals, namely the establishment of the sinister New World Order.
This essay examines the accuracy of these claims. Specifically, it investigates the charge that the New York Federal Reserve Bank is owned, directly or indirectly, by foreign elements, whether the New York Fed in effect runs the whole Federal Reserve System, and whether its enormous annual profits accrue primarily to foreigners or to the U.S government. This essay shows that there is little evidence to support the idea of foreign ownership and much that contradicts it. In addition, it presents evidence to show that the New York Fed does not command the entire System, as well as recent data demonstrating that the System's profits are paid to the federal government.
Who Owns the Federal Reserve Bank of New York?
Each of the twelve Federal Reserve Banks is organized into a corporation whose shares are sold to the commercial banks and thrifts operating within the Bank's district. Shareholders elect six of the nine the board of directors for their regional Federal Reserve Bank as well as its president. Mullins reported that the top eight stockholders of the New York Fed were, in order from largest to smallest as of 1983, Citibank, Chase Manhatten, Morgan Guaranty Trust, Chemical Bank, Manufacturers Hanover Trust, Bankers Trust Company, National Bank of North America, and the Bank of New York (Mullins, p. 179). Together, these banks owned about 63 percent of the New York Fed's outstanding stock. Mullins then showed that many of these banks are owned by about a dozen European banking organizations, mostly British, and most notably the Rothschild banking dynasty. Through their American agents they are able to select the board of directors for the New York Fed and to direct U.S. monetary policy. Mullins explained,
'... The most powerful men in the United States were themselves answerable to another power, a foreign power, and a power which had been steadfastly seeking to extend its control over the young republic since its very inception. The power was the financial power of England, centered in the London Branch of the House of Rothschild. The fact was that in 1910, the United States was for all practical purposes being ruled from England, and so it is today' (Mullins, p. 47-48).
(this film was made only 6 days ago)Who Owns and Controls the Federal Reserve?
by Dr. Edward Flaherty, University of Charleston
Is the Federal Reserve System secretly owned and covertly controlled by powerful foreign banking interests? If so, how? These claims, made chiefly by authors Eustace Mullins (1983) and Gary Kah (1991) and repeated by many others, are quite serious because the Fed is the United States central bank and controls U.S. monetary policy. By changing the supply of money in circulation, the Fed influences interest rates, affecting the mortgage payments of millions of families, causing the financial markets to boom or collapse, and prompting the economy to expand or to stumble into recession. Such awesome power presumably would be used to benefit the U.S. economy. Mullins and Kah both argued that the Federal Reserve Bank of New York is owned by foreigners. Although the New York Fed is just one of twelve Federal Reserve banks, controlling it, they claimed, is tantamount to control of the entire System. Foreigners use their command of the New York Fed to manipulate U.S. monetary policy for their own and, as Kah asserted, to further their global political goals, namely the establishment of the sinister New World Order.
This essay examines the accuracy of these claims. Specifically, it investigates the charge that the New York Federal Reserve Bank is owned, directly or indirectly, by foreign elements, whether the New York Fed in effect runs the whole Federal Reserve System, and whether its enormous annual profits accrue primarily to foreigners or to the U.S government. This essay shows that there is little evidence to support the idea of foreign ownership and much that contradicts it. In addition, it presents evidence to show that the New York Fed does not command the entire System, as well as recent data demonstrating that the System's profits are paid to the federal government.
Who Owns the Federal Reserve Bank of New York?
Each of the twelve Federal Reserve Banks is organized into a corporation whose shares are sold to the commercial banks and thrifts operating within the Bank's district. Shareholders elect six of the nine the board of directors for their regional Federal Reserve Bank as well as its president. Mullins reported that the top eight stockholders of the New York Fed were, in order from largest to smallest as of 1983, Citibank, Chase Manhatten, Morgan Guaranty Trust, Chemical Bank, Manufacturers Hanover Trust, Bankers Trust Company, National Bank of North America, and the Bank of New York (Mullins, p. 179). Together, these banks owned about 63 percent of the New York Fed's outstanding stock. Mullins then showed that many of these banks are owned by about a dozen European banking organizations, mostly British, and most notably the Rothschild banking dynasty. Through their American agents they are able to select the board of directors for the New York Fed and to direct U.S. monetary policy. Mullins explained,
'... The most powerful men in the United States were themselves answerable to another power, a foreign power, and a power which had been steadfastly seeking to extend its control over the young republic since its very inception. The power was the financial power of England, centered in the London Branch of the House of Rothschild. The fact was that in 1910, the United States was for all practical purposes being ruled from England, and so it is today' (Mullins, p. 47-48).
He further commented that the day the Federal Reserve Act was passed, "the Constitution ceased to be the governing covenant of the American people, and our liberties were handed over to a small group of international bankers" (Ibid, p. 29).
Unfortunately, Mullins' source for the stockholders of the New York Fed could not be verified. He claimed his source was the Federal Reserve Bulletin, although it has never included shareholder information, nor has any other Federal Reserve periodical. It is difficult researching this particular claim because a Federal Reserve Bank is not a publicly traded corporation and is therefore not required by the Securities and Exchange Commission to publish a list of its major shareholders. The question of ownership can still be addressed, however, by examining the legal rules for acquisition of such stock. The Federal Reserve Act requires national banks and participating state banks to purchase shares of their regional Federal Reserve Bank upon joining the System, thereby becoming "member banks" (12 USCA 282). Since the eight banks Mullins named all operate within the New York Federal Reserve district, and are all nationally chartered banks, they are required to be shareholders of the New York Federal Reserve Bank. They are also probably the major shareholders as Mullins claimed.
Are these eight banks on Mullins' list of stockholders owned by foreigners, what Mullins termed the London Connection? The SEC requires the name of any individual or organization that owns more than 5 percent of the outstanding shares of a publicly traded firm be made public. If foreigners own any shares of Mullins' eight banks, then their portions are not greater than 5 percent at this time. With no significant holdings of the major New York area banks, it does not seem likely that foreign conspirators could direct their actions.
Perhaps foreigners own shares of the New York Federal Reserve Bank directly. The law stipulates a small portion of Federal Reserve stock may be available for sale to the public. No person or organization, however, may own more than $25,000 of such public stock and none of it carries voting rights (12 USCA 283). However, under the terms of the Federal Reserve Act, public stock was only to be sold in the event the sale of stock to member banks did not raise the minimum of $4 million of initial capital for each Federal Reserve Bank when they were organized in 1913 (12 USCA 281). Each Bank was able to raise the necessary amount through member stock sales, and no public stock was ever sold to the non-bank public. In other words, no Federal Reserve stock has ever been sold to foreigners; it has only been sold to banks which are members of the Federal Reserve System (Woodward, 1996).
Regardless of the foreign ownership conjecture, Mullins argued that since the money-center banks of New York owned the largest portion of stock in the New York Fed, they could hand-pick its board of directors and president. This would give them, and hence the London Connection, control over Fed operations and U.S. monetary policy. This argument is faulty because each commercial bank receives one vote regardless of its size, unlike most corporate voting structures in which the number of votes is tied to the number of shares a person holds (Ibid). The New York Federal Reserve district contains over 1,000 member banks, so it is highly unlikely that even the largest and most powerful banks would be able to coerce so many smaller ones to vote in a particular manner. To control the vote of a majority of member banks would mean acquiring a controlling interest in about 500 member banks of the New York district. Such an expenditure would require an outlay in the hundreds of billions of dollars. Surely there is a cheaper path to global domination.
An historical example may make clear that member banks do not control the Federal Reserve's policies. Galbraith (1990) recounted that in the spring of 1929 the New York Stock Exchange was booming. Prices there had been rising considerably, extending the bull market that had begun in 1924. The Federal Reserve Board decided to take steps to arrest the speculative bubble that appeared to have been forming: it raised the cost banks had to pay to borrow from the Federal Reserve and it increased speculators' margin requirements. Charles Mitchell, then the head of National City Bank (today known as Citibank), which was the largest shareholder of the New York Federal Reserve Bank according to Mullins, was so irritated by this decision that in a bank statement he wrote, "We feel that we have an obligation which is paramount to any Federal Reserve warning, or anything else, to avert any dangerous crisis in the money market" (Galbraith, p. 57). National City Bank promised to increase lending to offset any restrictive policies of the Federal Reserve. Wrote Galbraith, "The effect was more than satisfactory: the market took off again. In the three summer months, the increase in prices outran all of the quite impressive increase that had occurred during the entire previous year" (Ibid). If the Fed and its policies were really under the control of its major stockholders, then why did the Federal Reserve Board clearly buck the intent of its single largest shareholder?
This information also eluded fellow conspiracy theorist Gary Kah, who disagreed with Mullins on who owns the New York Fed. His Swiss and Saudi Arabian contacts identified the top eight shareholders as the Rothschild Banks of London and Berlin; Lazard Brothers Banks of Paris; Israel Moses Seif Banks of Italy; Warburg Bank of Hamburg and Amsterdam; Lehman Brothers of New York; Kuhn, Loeb Bank of New York; Chase Manhatten; and Goldman, Sachs of New York (Kah, p. 13). It is impossible to verify Kah's information because it is not known who his "contacts" were. Nevertheless, Kah's list differs substantially from Mullins' compilation. Most interestingly, in Kah's list foreigners own the New York Fed directly without having to own majority interests in U.S. banks, as is the case with Mullins' list. The discrepancies in the two lists mean that at least one of them is wrong, and possibly both. Kah's list is the bogus one because no public stock has ever been issued, so it is not possible for anyone on Kah's list other than Chase Manhatten to own shares of the New York Fed.
Moreover, Kah seemed ignorant of important details about the organization of Federal Reserve stock and management, especially for someone claiming to have done as much research on the subject as he did. He referred to the organizations on his stockholders list as "Class A shareholders," which is curious because Federal Reserve stock is not classified in this manner (Ibid). It can be either member stock, which can be purchased only by commercial banks and thrifts seeking to become members of the Federal Reserve System, or public stock. However, the directors of a Federal Reserve bank are separated into Class A, B, and C categories, depending on how they are appointed (12 USCA 302, 304, 305). Three class A directors are chosen by the member banks. Three class B directors are also elected by the member banks to represent the non-bank sectors of the economy. The final three directors, class C, are picked by the Board of Governors also to represent the non-bank public. This may be the source of Kah's confusion, but it is a relatively simple point that he should have detected had his research efforts been thorough.
Does the New York Fed Call the Shots?
Mullins and Kah further argued that by controlling the New York Fed the international banking elite could command the entire Federal Reserve System, and thus direct U.S. monetary policy for their own profit. "For all practical purposes," Kah stressed, "the Federal Reserve Bank of New York is the Federal Reserve" (Ibid). This is the linchpin of their conspiracy theory because it provides the mechanism by which the international bankers execute their plans.
A brief look at how the Fed's powers over monetary policy are actually distributed shows that the key assumption in the Mullins-Kah conspiracy theory is erroneous. The Federal Reserve System is controlled not by the New York Fed, but by the Board of Governors (the Board) and the Federal Open Market Committee (FOMC). The Board is a seven member panel appointed by the President and approved by the Senate. It determines the interest rate, known as the discount rate, for loans to commercial banks and thrifts, selects the required reserve ratio which determines how much of customer deposits a bank must keep on hand (a factor that significantly affects a bank's ability create new loans), and also decides how much new currency Federal Reserve Banks may issue each year (12 USCA 248). The FOMC consists of the members of the Board, the president of the New York Fed, and four presidents from other Fed Banks. The FOMC formulates open market policy, which determines how much in government bonds the Fed Banks may trade, and is the most effective and commonly used of the Fed's monetary policy tools (12 USCA 263). The key point is that a Federal Reserve Bank cannot change its discount rate or required reserve ratio, issue additional currency, or purchase government bonds without the explicit approval of either the Board or the FOMC.
The New York Federal Reserve Bank through its direct and permanent representation on the FOMC has more say on monetary policy than other Federal Reserve Banks, but it still only has one vote of twelve on the FOMC and no say at all in setting the discount rate or the required reserve ratio. If it wanted monetary policy to go in one direction, while the Board and the rest of the FOMC wanted policy to go another, then the New York Fed would be out-voted. The powers over U.S. monetary policy rest firmly with the publicly-appointed Board of Governors and the Federal Open Market Committee, not with the New York Federal Reserve Bank or a group of international conspirators.
Mullins also made a great to-do about the Federal Advisory Council (the Council). This is a panel of twelve representatives appointed by the board of directors of each Fed Bank. The Council meets at least four times each year with the members of the Board to give them their advice and to discuss general economic conditions (12 USCA 261, 262). Many of the members have been bankers, a point not at all missed by Mullins. He speculated that it is able to force its will on the Board of Governors.
The claim that the "advice" of the council members is not binding on the Governors or that it carries no weight is to claim that four times a year, twelve of the most influential bankers in the United States take time from their work to travel to Washington to meet with the Federal Reserve Board merely to drink coffee and exchange pleasantries (Mullins, p. 45).
A point very much missed by Mullins is that the Council has no voting power in Board meetings, and thus has no direct input into monetary policy. In support of his hypothesis that Council members have been able to impose their will on the Board, Mullins offered no evidence, not even an anecdote. Moreover, his Council theory is inconsistent with his general thesis that the Federal Reserve System is manipulated by European banking interests through their control of the New York Fed. If this were true, then why would they also need the Council?
Who Gets the Fed's Profits?
Gary Kah and Thomas Schauf have also maintained that the huge profits of the Federal Reserve System are diverted to its foreign owners through the dividends paid to its stockholders. Kah reported "Each year billions of dollars are 'earned' by Class A stockholders of the Federal Reserve" (Kah, p. 20). Schauf further lamented by asking, "When are the profits of the Fed going to start flowing into the Treasury so that average Americans are no longer burdened with excessive, unnecessary taxes?"
The Federal Reserve System certainly makes large profits. According to the Board's 1995 Annual Report, the System had net income totaling $23.9 billion, which, if it were a single firm, would qualify it as one of the most profitable companies in the world. How were these profits distributed? By an agreement between the Board of Governors and the Treasury, nearly all of the Fed's annual profits are paid to the federal government. Accordingly, a lion's share of $23.4 billion, which represents 97.9 percent of the Federal Reserve's net income, was transferred to the Treasury. The Federal Reserve Banks kept $283 million, and the remaining $231 million was paid to its stockholders as dividends.
Given that less than one percent of the Fed's net earnings are distributed as dividends, it seems that an investor could easily find much more profitable ways to store their wealth than buying Federal Reserve stock. Regarding Schauf's lamentation, the Federal Reserve System has been paying its profits to the Treasury since 1947.
Conclusion
It does not appear that the New York Federal Reserve Bank is owned, either directly or indirectly, by foreigners. Neither Mullins nor Kah provided verifiable sources for their allegations, nor did their mysterious sources agree on exactly who owns the New York Federal Reserve Bank. Moreover, their central assumption that control of the New York Federal Reserve is the same as control of the whole System is wrong and demonstrates a lack of understanding of the System's basic organizational structure. The profits of the Federal Reserve System, again contrary to the assertion of Kah and Schauf, are funneled back to the federal government, not to an "international banking elite." If the U.S. central bank is in the grip of a banking conspiracy, then Mullins and Kah have certainly not uncovered it.
by Dr. Edward Flaherty, University of Charleston
Last updated July 18, 1997
References:
82nd Annual Report, 1995. Board of Governors of the Federal Reserve System. U.S. Government Printing Office.
Galbraith, John K. 1990. A Short History of Financial Euphoria. New York: Whittle Direct Books.
Kah, Gary. 1991. En Route to Global Occupation. Lafayette, La.: Huntington House.
Mullins, Eustace. 1983. Secrets of the Federal Reserve. Staunton, Va.: Bankers Research Institute.
Shauf, Thomas. 1992. The Federal Reserve. Streamwood, IL: FED-UP, Inc.
Woodward, G. Thomas. 1996. "Money and the Federal Reserve System: Myth and Reality." Congressional Research Service
United States Code Annotated. 1994. U.S. Government Printing Office.
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aloha.
p.s. the answer remains in the American people who need to PROSECUTE for treason the Congressmen, Presidents who operate under the new Constitution..........
" Sincere consideration of “Presentment” to a Grand Jury under the ordained and established constitution for the United States of American (1787), Amendment V is in order. Numerous High Crimes and Misdemeanors have been committed under the Constitution for the United States of America, and Laws made in Pursuance thereof, and under the constitution for the State of Colorado, and the laws made in Pursuance thereof, and against the Peace and Dignity of the People, including but not limited to, C.R.S. 18-11-203, which defines and prescribes punishment for “Seditious Associations” which is applicable to the other constitutions, and the intents and professed purposes of their Organizations, Corporations and Associations. If the Presentment should be obstructed by the members of the Bar, ARREST THEM.
I could go on but the story is long! I hope this information and research is of assistance to you. Much remains to be uncovered and disclosed, as it is necessary and imperative to secure the Lives, Liberties, Property, Peace and Dignity of the People and our Posterity. Good Hunting and the Good Lord be with you in all your endeavors.
God Bless John Nelson, Jure Soli Jure Sanguinis, Jure Coronea " see http://myweb.ecomplanet.com/GORA8037
How ridiculous, to think that we Na Kanaka Women cannot think and see where Paul Volcker and Bernanke is leading our country to or down into the abyss.
Remarks by Governor Ben S. Bernanke
At the Global Economic and Investment Outlook Conference, Carnegie Mellon University, Pittsburgh, Pennsylvania
November 6, 2003
The Jobless Recovery
In some ways, the economic slowdown that began in the United States in late 2000 has been relatively mild. The official period of recession, as dated by the National Bureau of Economic Research, lasted only eight months, from March to November of 2001. Real gross domestic product declined very modestly before resuming a moderate pace of growth, and some important sectors of the economy--residential construction being the leading example--remained exceptionally strong throughout the period.
Nevertheless, in one key aspect, namely, the performance of the labor market, the downturn was severe and the recovery has been exceptionally slow. You may recall that the labor market also recovered slowly following the 1990-91 recession, earning that period the sobriquet "the jobless recovery." However, since the trough of the current cycle in November 2001, the jobs situation by most measures has been even slower to improve than in the 1990-91 episode. The weak labor market has imposed hardship on millions of American workers, their families, and their communities; and, conceivably, continued failure of the labor market to improve could threaten the sustainability of the economic recovery itself. Thus, trying to understand what underlies the unusually delayed recovery of employment is critical.
In my talk today I will discuss some explanations for, and implications of, the current jobless recovery. I will begin by discussing the measurement of employment, which has been the source of recent controversy. I will then turn to explanations for the weakness of the labor market, noting that several factors have contributed to the problem. Finally I will turn to the outlook for employment and the implications for monetary policy. As always, the opinions I will express today are my own and do not necessarily reflect the views of my colleagues at the Board of Governors or on the Federal Open Market Committee.1
The Payroll Survey and the Household Survey
As noted by Conan Doyle's great fictional detective, Sherlock Holmes, it is a "capital mistake" to theorize in advance of the data. Before turning to economic explanations of the labor market's behavior, therefore, I will briefly discuss the problem of measuring job creation.
There are two leading sources of data on aggregate U.S. employment, known informally as the payroll survey and the household survey--and more formally, as the Current Employment Statistics survey and the Current Population Survey, respectively. The payroll survey is the responsibility of the Bureau of Labor Statistics (BLS), while the household survey is conducted jointly by the BLS and the Bureau of the Census.
The payroll survey is a survey of employers. The monthly data gathered in this survey come from the payroll records of about 400,000 business establishments, covering among them about a third of total nonfarm payroll employment (including civilian government workers). Also, with a lag of about a year, the payroll survey is benchmarked to an almost-complete count of U.S. payroll employment, based on unemployment insurance tax records and other administrative data.
The household survey, in contrast, is a survey of individuals; it is based on a random sample of about 60,000 households contacted each month by Census survey-takers. For each household in the sample, the survey-takers attempt to determine how many people aged sixteen or older are currently employed, how many are looking but unable to find work (the unemployed), and how many are out of the labor force, meaning that they are neither employed nor actively looking for work. The ratio of the unemployed to those working or looking for work is the well-known statistic, the civilian unemployment rate, which currently stands at just above 6 percent of the labor force.
An important and puzzling fact is that, although neither survey suggests that the U.S. job market is currently strong, the two surveys provide quite different estimates of the extent of job loss in the past three years. According to the payroll survey (including the BLS's estimate of the upcoming benchmark revision), as of the end of September 2003 nonfarm payroll employment has fallen by some 2.8 million jobs since the beginning of the recession in March 2001 and by almost 1.2 million jobs since the recession's trough in November 2001. Also, according to this survey, manufacturing is by far the hardest hit sector. About 2.4 million of the 2.8 million jobs lost since March 2001 were in manufacturing, and manufacturing more than accounts for the net job loss since the recession trough. Indeed, from the trough through this September, nonmanufacturing payrolls have actually grown by some 125,000 jobs.2
The household survey shows a less severe decline in employment than the payroll survey does. To compare the data from the household and payroll surveys, we must first take account of the fact that their coverage is different. Notably, the payroll survey counts the number of jobs, whereas the household survey counts the number of people employed. Hence a person who holds two jobs would be counted twice in the payroll survey but only once in the household survey. The household survey also counts certain groups of workers excluded from the payroll survey, including unincorporated self-employed workers, unpaid family workers, and farm workers. One can correct for these differences and use the household survey to estimate nonfarm payroll employment, the concept measured by the payroll survey. When the necessary adjustments are made, the net reduction in payroll employment since March 2001, according to the household survey, is just over 600,000 jobs, significantly less than the 2.8 million job-loss estimate of the payroll survey. Also in contrast to the payroll survey, the household survey suggests that employment has recovered somewhat since the recession trough. According to the household survey, although some 1.3 million payroll jobs were lost between March 2001 and November 2001, more than 600,000 jobs have been created since the recession officially ended in November 2001.
Which, if either, of these two surveys are we to believe? The payroll survey has the important advantage of being based on a much larger sample; indeed, as already mentioned, with a lag of one year the payroll survey is adjusted to reflect virtually a complete count of nonfarm payroll employment. Moreover, one would generally presume that firms' payroll records are likely to be more accurate than the information obtained by interviewing household members, as individuals may misunderstand the survey-taker's questions or for one reason or another misreport their own labor market status or that of other members of the household. On the other hand, the household survey has potential advantages of its own: For example, it may capture "off-the-books" employment, which will generally be missed by the payroll survey. Some analysts have also suggested that the household survey may be more effective than the payroll survey at capturing jobs created by new businesses, particularly small businesses, during the early expansion phase of the cycle. On this latter point, however, a recent redesign of the payroll survey, which among other improvements allows new samples of employers to be drawn more frequently, has likely improved the survey's coverage of startup businesses. Indeed, the latest two benchmark revisions, in March 2002 and March 2003, both revised payroll employment downward; if the main problem with the survey had been a failure to measure employment by new businesses, the revisions would have been upward.
A team of BLS and Census statisticians (Nardone and others, 2003) recently conducted a careful comparative study of the two surveys. Although the study does not come to firm conclusions, it does suggest one possibly important reason to believe that the household survey is currently overstating employment growth. Because the household survey is only a sampling of the population, much like a public opinion poll, aggregate employment figures can be obtained from this survey only by scaling up the household responses by factors that reflect the estimated size and composition of the U.S. population. Between decennial censuses, the Bureau of the Census estimates the U.S. population from birth and death records and from historical data on immigration rates.3 However, according to the new study, the Census Bureau may have overestimated U.S. population growth since 2000, primarily by assuming too high a rate of legal and illegal immigration to this country. The authors of the study noted that fewer people are likely to enter the country when the economy is weak and fewer jobs are available, as has been the case for the past few years, a factor not accounted for in the Census estimate of immigration. In addition, tighter restrictions on immigration since the September 11, 2001, terrorist attacks have likely reduced the number of potential workers entering the country. To the extent that the Census Bureau has overestimated the U.S. population, the job estimates from the household survey will be overstated as well. This explanation for the household survey's relatively high job estimate is consistent with the fact that during the 1990s, a period during which (we now know) the Census Bureau significantly underestimated net immigration to the United States, employment estimates from the household survey were significantly lower than those based on the payroll survey.4
To summarize, we do not fully understand the differences in employment reported by the payroll and household surveys, and the truth probably lies in between the two series. However, because of the larger sample used in the payroll survey and because of possible problems with the population estimates used to scale the household survey, somewhat greater reliance should probably be placed on the payroll survey.
Whatever the verdict regarding the relative reliability of the two surveys, their differences should not obscure the fact that the U.S. labor market has been weak. Indicators of labor market underperformance include (1) the unemployment rate, which remains 1.9 percentage points above its level at the March 2001 peak of the business cycle; (2) a significant decline in labor force participation, particularly among younger workers; (3) the rising share of the unemployed who have been out of work six months or more; (4) the relatively slow decline in initial claims for unemployment insurance, as well as in continuing claims (though both of these have improved a bit lately); (5) the fact that the Conference Board's index of help-wanted advertising remains below the level of the recession trough; and (6) the relatively pessimistic views about prospects for the labor market revealed in surveys of both employers and workers. (For example, the Conference Board's index of household perceptions of job availability has continued to fall this year and currently is close to the lowest levels since 1993.) In particular, although various data suggest that layoffs have tapered off significantly, it appears that job creation and hiring remain quite sluggish. For example, according to new BLS data on employment dynamics, as of the end of 2002, "job losses"--defined as decreases in payroll employment at shrinking establishments--had returned to pre-recession levels. By contrast, "job gains"--increases in payroll employment at expanding establishments--had not recovered at all.
The Slow Recovery of the Labor Market: Some Possible Explanations
Why has the job market remained relatively weak despite strong recent gains in spending and output? A number of hypotheses have been advanced.
First, some have suggested that firms over-hired during the late 1990s boom, implying that the levels of employment seen before the recession peak in March 2001 were not sustainable. However, comparisons of the current employment situation with alternative benchmarks do not much change the impression that the recent decline in employment has been unusually severe. For example, if for the sake of argument we defined sustainable labor market conditions as an unemployment rate of 5 percent and a labor force participation rate equal to its approximate trend value of 67 percent, the level of aggregate employment would still be about 3-1/2 million jobs below the "sustainable" level.
Second, some observers have pointed to increases in benefit costs to employers as a factor retarding hiring. Benefit costs incurred by private employers have grown rapidly in recent years. For example, according to the Employment Cost Index (ECI), benefit costs rose more than 11 percent, compared to wage and salary increases of about 6 percent, between September 2001 and September 2003. The main sources of this increase are health insurance costs, which rose more than 20 percent over that period (despite some efforts of employers to shift those costs back to employees) and pension costs, particularly the costs of funding defined-benefit pension plans.
The increase in benefits costs is a negative factor for employment and may help to explain why firms have worked so assiduously to increase the productivity of existing workers rather than hire new ones. However, I suspect that benefits costs are not the major explanation of the hiring slowdown. Employers appear to have partly recouped health and pension costs by raising wages more slowly and by reducing other parts of the benefits package. In addition, employers who were deterred from permanent hiring by rising benefits costs would be expected to increase workweeks of existing workers and make greater use of temporary workers; but workweeks have not yet increased and the use of temporary workers has grown thus far only to a moderate extent.5 Finally, although underfunded pension plans have been a headache for many employers, the share of private-sector workers in defined benefit plans is only about 20 percent and falling, and many newly hired workers would not be eligible for such plans. Thus, for the typical company, pension costs at least (as opposed to the costs of health insurance) are unlikely to have had a large effect on the marginal cost of hiring a new worker.
A third explanation for the slowness of firms to begin hiring is that an elevated level of political and economic uncertainty has made firm managers more hesitant to expand their businesses. Among the obvious sources of uncertainty are the September 11 attacks and their aftermath, including the wars in Afghanistan and Iraq; the accounting and corporate governance scandals that came to light in the summer of 2002; and lingering concerns about the durability of the economic recovery. The uncertainty hypothesis has a ring of truth, I believe, and it is consistent with the facts that business capital investment has only recently begun to pick up and that inventories are still being liquidated. However, the observations that workweeks have not risen and temporary employment have risen only modestly, already noted in connection with the cost-of-benefits explanation, is a bit of evidence against the uncertainty explanation as well. If firms needed more labor services but were reluctant to commit to new hiring, one would expect to see them lengthening workweeks and hiring temporary workers in large numbers, measures that increase labor input but are also easier to reverse.6
A fourth explanation for the slow recovery of employment is that much of the employment loss is the result of an increased pace of structural change in the U.S. economy. Structural change implies the permanent contraction of certain industries. Although one would expect jobs lost in declining industries to be replaced eventually with jobs in growing industries, this process is likely to be protracted, because it takes time for new jobs to be created and for workers to relocate and retrain.
There can be no doubt that the U.S. economy is undergoing structural change and that this change has important implications for the labor market. One might ask, however, whether the pace of structural change has been noticeably higher recently than in the past. In support of the structural change hypothesis, Groshen and Potter (2003) have pointed out that the great majority of layoffs in the past few years have been explicitly permanent, not temporary. They have also noted that many of the industries that lost jobs during the recent recession continue to lose jobs, whereas many industries that gained jobs during the recession continue to gain jobs. These facts are suggestive but not conclusive. Permanent layoffs were far greater than temporary layoffs in the 1990-91 recession as well, but job growth returned more quickly in that episode than in the present one. The fact that industries that lost jobs in the 2001 recession continue to lose jobs is consistent with structural change, but it is also consistent with a slow job-market recovery occurring for other reasons.7
To explore the structural change hypothesis further, I find it useful to think more specifically about what types of structural change may have begun to occur more quickly in recent years--particularly in the manufacturing sector, which has borne the brunt of the job loss since 2001. Factors that have certainly contributed to structural change in manufacturing is globalization and changing trade patterns. As you know, the U.S. trade balance has deteriorated significantly in recent years, and a disproportionate part of the change in trade flows has taken place in manufactured goods. (Services, too, have been affected, particularly through the outsourcing of jobs abroad; but for concreteness, I focus here on the quantitatively more important case of manufacturing.) Currently, about 26 percent of the value of manufactured goods consumed in the United States is produced abroad, up about 5 percentage points since early 1999 and about twice the level of the early 1980s. The share of domestic manufacturing production that is exported is about 16 percent, roughly 2 percentage points below its peak in early 2001 but about the same level that prevailed in the late 1990s. Therefore, in the trade area, the major change since the late 1990s appears to be an increased propensity of Americans to buy foreign-made goods, particularly consumer goods, as opposed to a loss of foreign markets for domestic producers.8 Compared with the hypothetical scenario in which domestic and foreign demands for manufactured goods are held constant but in which import and export shares are set to their 1999 levels, this shift in trade patterns can be argued to have cost the United States a significant number of manufacturing jobs--according to some private-sector estimates, perhaps a third of the total lost since the recession began.9
At this point in the debate, one usually hears two opposing views. On one side, economists generally point out the benefits of free trade to the economy as a whole, which in principle outweigh the short-run costs borne by workers and firms in industries hurt by trade competition. Certainly, those who stress the costs of trade to domestic manufacturers are prone to overlook its very substantial benefits to domestic consumers, exporters, importers of intermediate goods, and investors. On the other side, manufacturers and union leaders typically argue that free trade is all very well in theory, but the real world is messy and involves many deviations from economists' idealized views. Moreover, whatever the benefits of trade to the economy as a whole, no one can deny that the pain felt by workers displaced by changes in trade flows is real and serious.
In lieu of involving myself (unproductively) in this debate, I will make two broader points that put the current trade issue in some context. First, the recent shift in trade patterns cannot at bottom be explained by microeconomic factors such as trade barriers or changes in consumer preferences for imported versus domestic goods. Rather, the shifts in trade are fundamentally the result of a macroeconomic phenomenon--namely, the U.S. current account deficit. The current account deficit, now close to 5 percent of U.S. GDP, reflects both U.S. economic weakness and U.S. economic strength. It reflects weakness in that one of its causes is the relatively low rate of U.S. national saving. Low national saving forces us to meet domestic funding needs by borrowing abroad, and the high rate of domestic spending implied by a low saving rate forces us to meet domestic demands by importing more than we export. But the current account deficit also reflects U.S. economic strength, shown both by the attractiveness of the U.S. economy to foreign investors (which has stimulated capital inflows and supported the value of the dollar) and by the fact that economic growth in the United States is proceeding more rapidly than that of most of our trading partners (which has resulted in imports increasing more than exports).
As is widely recognized, the U.S. current account deficit cannot be sustained indefinitely at its current high level and will eventually have to be brought down to a more manageable size. However, eliminating the U.S. current account deficit too quickly is neither desirable nor feasible. Any attempt to do so would probably involve sharp reductions in domestic spending, which would have far worse effects on U.S. employment than the current account deficit does. Thus the hypothetical scenario to which I alluded earlier, in which domestic and foreign demands are unchanged but export and import shares are those of 1999, is simply not a feasible alternative right now. For now, our best strategy is to encourage pro-growth policies among our trading partners, in the expectation that more-rapid growth abroad will raise the demand for U.S. exports. At the same time, we should do what we can to help U.S. workers displaced by shifting trade patterns to retrain and relocate, if necessary.
The second point I will make may surprise you; it is that, despite the inroads made by imports, in real terms manufacturing production in the United States has risen rapidly over the past fifty years.10 The recent recession has affected that trend only modestly. For example, although as of September 2003 U.S. manufacturing output was about 6 percent below its mid-2000 peak, it was also about equal to the level reached in 1999 and half again the level attained in 1990.11
If manufacturing output has not declined in the United States, then what explains the sharp reductions in U.S. manufacturing employment that have occurred not only in the past few years but over preceding decades as well? The answer is a stellar record of productivity growth. Over the years, new technologies, processes, and products have permitted manufacturing firms to produce ever-increasing output with ever fewer workers.12 The long-run trend in manufacturing is similar to what occurred earlier in agriculture: At one time a majority of the U.S. population lived on farms; but agricultural productivity has improved so much that although farm workers are only 2-1/2 percent of the workforce, they are able both to feed the nation and export substantial quantities of food as well.
This observation brings me to my fifth and final possible explanation of the jobless recovery, which is the remarkable increase in labor productivity we have seen in recent years, not only in manufacturing but in the economy as a whole. Since the trough of the recession in the fourth quarter of 2001, productivity in the nonfarm business sector has risen at an annual average rate of 4-1/2 percent, compared with average annual increases of 2-1/2 percent in the late 1990s, itself a period of strong productivity growth. This surprising productivity performance probably reflects both some increase in the long-run rate of productivity growth as well as unmeasured increases in the work effort of employees. However, in my view, neither of these factors can fully account for the increase in productivity growth, particularly some of the recent quarterly numbers. I suspect that some of the recent expansion in productivity is instead the delayed result of firms' heavy investment in high-technology equipment in the latter part of the 1990s. Only over time have managers learned how to reorganize their production and distribution so as to take full advantage of these new technologies and thus enhance the productivity of capital and workers.
Strong productivity growth provides major benefits to the economy in the longer term, including higher real incomes and more efficient and competitive industries. But in the past couple of years, given erratic growth in final demand, it has also enabled firms to meet the demand for their output without hiring new workers. Thus, in the short run, productivity gains, coupled with growth in aggregate demand that has been insufficient to match the expansion in aggregate supply, have contributed to the slowness of the recovery of the labor market. Although other explanations for the jobless recovery--overstaffing in the boom, benefits costs, uncertainty, and structural change--have played a role, in my view the productivity explanation is, quantitatively, probably the most important. As we will see, that conclusion (if correct) bodes well for the future.
Outlook and Policy Implications
Because new workers are always entering the labor force, the U.S. economy needs to create something on the order of 150,000 net new jobs each month just to keep the unemployment rate stable. When can we expect to see this (or a higher) level of job creation?
A few encouraging signs have appeared in the labor market data of recent months, including a modest increase in payroll employment in September (after a long string of negative readings) and a slow decline in new claims for unemployment insurance. However, so far these signals of recovery remain tentative; on the basis of the labor-market data alone, asserting that an employment recovery has begun would be premature.
Nevertheless, I find it reasonable to expect that job growth will begin to pick up in the next quarter or two. Real GDP has accelerated considerably since the spring, and most forecasters project that it will continue to grow strongly in 2004. Moreover, it appears inevitable that the recent outsized gains in labor productivity will soon begin to moderate, reflecting both the normal cyclical pattern of productivity growth and the likelihood that employers will soon begin to exhaust opportunities to squeeze out still further gains in productivity. Arithmetically, if output growth remains strong and productivity growth returns to more normal levels, employment must begin to rise. Some solid job growth, in turn, would help to ensure that the recovery is self-sustaining by increasing consumer confidence.
What role does monetary policy have in this scenario? As you know, the Federal Reserve has a dual mandate, which requires the central bank to try to achieve both maximum sustainable employment and price stability. An employment recovery will require continued strong growth in spending and output to induce firms to hire and invest more aggressively. The employment half of the dual mandate thus suggests a need to continue the Fed's current accommodative monetary policy.
Of course, the Fed's policies must also be consistent with ensuring price stability --the other half of the dual mandate. As I noted in earlier talks, I believe that the current low level of inflation, the expansion of aggregate supply by means of ongoing productivity growth, and the high degree of slack in resource utilization together leave considerable scope for a continuation of the currently accommodative monetary policy without undue risk to price stability.
A possible concern is that, if (as some have argued) the jobless recovery is in part the result of an unusually high pace of structural change, then the degree of longer-term mismatch between workers' skills and the available jobs may have increased. If so, then the effective slack in the economy may be less than we now think, and inflationary pressures may emerge more quickly than we currently expect. This possibility must be taken seriously. However, as a counterweight to this concern, I note that a number of factors, such as the greater average age and experience of the labor force and an increasingly flexible and dynamic labor market (Schreft and Singh, 2003), have tended in recent years to reduce the sustainable rate of unemployment.
Another way to assess the current inflation risk is to compare the recent experience to the pattern of the last so-called jobless recovery, following the 1990-91 recession. Initially at least, that episode was similar to the current one. Both the 1990-91 and the 2001 recessions lasted eight months, according to the National Bureau of Economic Research. Employment kept falling after the trough in both recessions, while labor productivity rose sharply. In both recessions, also, core inflation was virtually flat during the recession itself.
The closely parallel evolutions of the two episodes ended, however, shortly after the recession troughs. In particular, the rebound in employment growth was much stronger in the 1990-91 episode. In that episode, employment growth stabilized about a year after the trough date and had reached 1 percent at an annual rate by six quarters after the trough. In contrast, in the current episode, employment was still falling six quarters after the trough. By three years after the 1991 trough, in March 1994, employment growth was 3 percent at an annual rate.
So, in short, the 1990-91 and 2001 episodes looked similar initially, but the recovery of the labor market after the trough was considerably faster in 1990-91 than it has been recently. What happened to inflation subsequent to the troughs? This is the critical point: During the three years after the March 1991 trough, core inflation (as measured by either the consumer price index or the personal consumption expenditures deflator) fell more than 2 percentage points, with most of this decline occurring after employment growth had turned positive. For comparison, in the current episode, core CPI inflation has fallen about 1-1/2 percentage points since the November 2001 trough, and core PCE inflation has fallen about 3/4 percentage point. Because the post-trough recovery in the labor market has been so much slower this time around, the experience of the earlier episode suggests that the current risk of increased inflation is, for the time being at least, quite small.
My conclusions therefore are relatively optimistic. The combination of faster growth in demand and slowing productivity growth should lead, in the next few quarters, to increased hiring. At the same time, inflation appears subdued and likely to remain so. Thus it appears that monetary policy can remain accommodative, supporting the economic recovery and the recovery of the labor market, without endangering price stability.
REFERENCES
Figura, Andrew (2003). "The Effects of Restructuring on Unemployment," FEDS Working Paper (forthcoming), Board of Governors of the Federal Reserve System.
Groshen, Erica, and Simon Potter (2003). "Has Structural Change Contributed to a Jobless Recovery?" Federal Reserve Bank of New York, Current Issues in Economics and Finance, vol. 9, no. 8, August.
Nardone, Thomas, Mary Bowler, Jurgen Kropf, Katie Kirkland, and Signe Wetrogan (2003). "Examining the Discrepancy in Employment Growth between the CPS and CES," paper presented to the Federal Economic Statistics Advisory Committee, October 17.
Schreft, Stacey, and Aarti Singh (2003). "A Closer Look at Jobless Recoveries," Federal Reserve Bank of Kansas City, Economic Review, Second Quarter, pp. 45-72.
Footnotes
1. I would like to thank the Board staff, notably Stephanie Aaronson, Bruce Fallick, Andrew Figura, Jonathan Pingle, and William Wascher, for outstanding assistance in the preparation of these remarks.Return to text
2. The weakness in manufacturing may also account for some of the job loss in closely related sectors, such as temporary help services and wholesale trade.Return to text
3. Notably, household employment was revised upward substantially in January 2003, on the basis of new population estimates for 2000, 2001, and 2002. Return to text
4. The use of contract workers or consultants is another possible explanation of the discrepancy between the two surveys. Such workers are technically self-employed, but in the household survey they might erroneously report themselves as employed by the company to which they are providing services. This misreporting would lead to an overstatement of wage and salary employment in the household survey and a corresponding understatement of self-employment. I am not aware of any data that could be used to measure the importance of this phenomenon. Return to text
5. The temporary-work industry lost about 500,000 jobs between late 2000 and late 2001 and thus far has recovered only about 150,000 of them. However, in support of the benefit-cost hypothesis, I note that employment of part-time workers, who often receive fewer benefits than full-time workers, has increased during the recovery, as it did in the 1990-91 episode as well. Return to text
6. Schreft and Singh (2003) argue that the U.S. labor market has become more flexible, allowing firms greater use of "just-in-time" employment practices. Though this development would tend to reduce permanent hiring during a period of uncertainty, it does not necessarily imply a reduction in total jobs, including temporary and part-time jobs. Return to text
7. Figura (2003) studied restructuring over a longer period. Although his methodology did not allow him to measure restructuring in the current downturn, he does find that restructuring plays an important role in recessions in general and appears to have increased in importance over the past two decades. Return to text
8. A case in point is the motor vehicles and parts industry, which has actually increased by a small amount its ability to export its output. The industry's increased export share has been offset, however, by a significant increase in the past year in the domestic market share of imported vehicles and parts. Return to text
9. The Progressive Policy Institute estimates that 800,000 manufacturing jobs have been lost because of the rise in the manufacturing trade deficit. Economy.com estimated that if the total current account deficit had been unchanged since the first quarter of 2001, nearly one million additional jobs would have been created in the United States. Since about 84 percent of imports are manufactured goods, the Economy.com estimate is fairly similar to that of the PPI. Although these numbers are provocative, I have not evaluated the methodologies underlying these estimates and cannot say whether they are reasonable. Return to text
10. In nominal terms, the share of manufacturing in U.S. GDP has been falling. However, because of strong productivity gains, relative prices in the manufacturing sector have fallen sufficiently to permit manufacturing output to keep pace with overall GDP in real terms. Return to text
11. This comparison is based on the manufacturing component of the Federal Reserve's index of industrial production. Return to text
12. Perhaps it is worth noting that some part of the long-term decline in manufacturing employment may be a statistical artifact, arising from outsourcing by manufacturing firms of accounting, financial, legal, and other services. A lawyer employed directly by a manufacturing firm is counted as a manufacturing employee; a lawyer engaged by a manufacturing firm on a consulting basis is not. Return to text
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