Wednesday, October 12, 2011

Herman Cain Exposed: The Federal Reserve Chairman

By Dan Beaulieu

As most of us already know, the Federal Reserve [Fed] came under expansive scrutiny in 2008 after the housing bubble burst and reaped havoc on our dollar. What most people don’t know is why the Federal Reserve came under fire. The absence of that knowledge creates a lack of conviction and rectifying our economic problems can only occur when both knowledge and conviction are achieved. The majority of Americans perceive our Federal Reserve as necessary and integral to our economy, as air is to our respiratory system. Most people don’t understand the immoral inner workings of the Fed nor do they understand the unconstitutionality of it. People are often surprised when they learn that the fed is privately owned.

Ex-federal reserve chairman and now presidential candidate Herman Cain has repeatedly defended the Federal Reserve claiming an audit would be “counterproductive”. He also recently announced that he admired Alan Greenspan, the man who created the giant bubble that led to our current crisis. Given the understanding that Herman Cain must certainly have about the Fed, being that he was a Federal Reserve Chairman, his defense is inexcusable, irresponsible and immoral to the wellbeing of the American people.

In this document, I will take you over the failures of fiat money, the corruption it breeds and the negative effect it has on our savings. This document is for those who want to understand the Fed more deeply, I offer a moderate history of the Fed to hopefully elucidate the subject and display why Herman Cain would be a continuation of bad economic policy and immorality against the American people.

“It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." - Henry Ford

History of Fiat Currency

In 1775 the Continental Congress began issuance of a paper currency called the Continental in preparation of the war with Great Britain. Since the notion of taxation was highly ridiculed and the war costs were so high, they began printing Bills of Credit (short term public loans to the government) in order to fund the war.

This proved problematic as by 1776, due to inflation (diluting the money supply), the Bills of Credit depreciated to 66% of initial value. In an attempt to combat the depreciation the states made paper currencies legal tender for all purchases and debts, enacted price controls and continued to print more money. In 1778 state and federal directed Procurement Officers (soldiers) to seize and pillage the people giving certificates of debt in return, which also quickly diminished in value. By 1780, hyperinflation led Congress to the conclusion that further printing was futile; the money supply had been diluted to just 1% of its original value in 6 years.

The overall failure of the paper Continental led our founders to authoring Article 1 Section 10 of our Constitution, which declared that only gold and silver were to be legal tender. This law was designed to protect us from the immorality of a devaluating currency; the theft of wealth at the behest of others.

The Federal Reserve Act

"This [Federal Reserve Act] establishes the most gigantic trust on earth. When the President [Wilson] signs this bill, the invisible government of the monetary power will be legalized....the worst legislative crime of the ages is perpetrated by this banking and currency bill." Charles A. Lindbergh, Sr., 1913

On December 23 of 1913 under Woodrow Wilson, the Federal Reserve Act was instated, which, at the peril of our Constitution, was granted legal authority to issue Federal Reserve notes. This system would be built around the ideology of macroeconomics, (later labeled Keynesian economics post 1936). Initially, as a safeguard, the dollar was fixed on the value of gold and was to be redeemable in gold at a rate of $20.67 per ounce. This assured low inflation and placed natural market restrictions on the Fed by allowing the market to influence the economy (although notably hindered by intervention). 

During that time the Federal Reserve comptroller assured the people that it was mathematically impossible to have economic recessions, claiming that this form of economic planning was superiorly more sophisticated; perfect. However according to the National Bureau of Economic Research, this notion was quickly invalidated as between 1918 and 1919 we experienced our first bubble and recession.


Bubbles form when the Federal Reserve lowers interest rates below the natural levels of a market, it influences expansion of investments well beyond sustainable levels. This distorts the signals that business uses to assess risk. These distortions then lead businesses to believe that consumers have the savings to back up their investments. However, artificially low (below market) interest rates don’t generate new wealth to make good on investments. So when the bubble pops these fallacies are realized in lost investments.

The bubbles and economic recessions continued, just as they had with every other central bank. Bubbles occurred in 1918 to 1919, 1920 to 1921, 1923 to 1924, 1926 to 1927, and 1929 to 1933. As you might be aware, 1933 was the year that President Franklin D. Roosevelt issued Executive order 6102 which not only restricted Americans from owning gold but ordered the seizure of gold. The gold fixed value of the dollar was then immediately changed from $20.67 to $35 per ounce. The Bubbles continued, 1937 to 1938, 1945, 1948 to 1949, 1953 to 1954, 1960 to 1961, and 1969 to 1970. Then things changed with a new Chairman of the Federal Reserve.

When Arthur Burns was appointed Chairman of the Fed (1970-78), he pushed for more secrecy by ending minutes keeping during meetings, allowing for concealment in meetings. He also made arguments for elasticity in our dollar by removing the “restriction” of the gold standard. On August 15, 1971 he got his wish.

We went off the gold standard and introduced ultimate elasticity to the Fed. This afforded them the ability to control the value of the dollar at their whim. This allso allowed the fed to interject the business cycle to make economic booms last longer, which in turn allowed the recessions last longer. The presence of real market restricts the boom from perpetuity, that is, every period of economic euphoria must be respected by an equal period of economic misery.

The recessions from 1918 to 1970 were relatively short and went fairly unnoticed due to the dollars fixed value. Once elasticity was granted and was perverted over time by intervention through inflation and low interest rates, the severity of the recessions were much more notable. Post gold fixed bubbles include 1973 to 1975, 1980, 1981 to 1982, 1990 to 1991 and 2000 to 2007, which brings us to our current crises.

The Great Bubble

The great bubble was largely attributed to the bad policies of Alan Greenspan (Herman Cain’s hero) who was the chairman of the Federal Reserve from 1987 until 2006. Greenspan intervened in the recession that should’ve followed the dot-com bubble. Instead of accepting the natural recession that should have occurred in 2001, the Fed began expanding the Housing Market. This didn’t negate the previous bubble; it merely stalled it by creating a bigger bubble. The Fed arrogantly continued its efforts to stop recession through low interest rates and actual interest rates fell below historical averages. At that point the Fed had abandoned all monetary rules in attempts to prop the market.

Alan Greenspan slashed the federal fund targets from 6.5% in January of 2001 all the way down to 1% by June 2003. He fixed the rates at an artificial low of 1% for a full year, which encouraged more bad investments and caused a massive expansion of the bubble. Then, by June of 2006, Greenspan had raised it back to 5.25%, a move that popped the bubble and unleashed the havoc of three overdue recessions.

“The few who understand the system, will either be so interested from its profits or so dependent on its favors, that there will be no opposition from that class.”
- Rothschild Brothers of London, 1863

Surly a man of Alan Greenspan’s intelligence saw what was happening as he undoubtedly understands basic economics and the business cycle. Bearing that leads to the question, what motive would Greenspan have for knowingly doing this? All one has to do is look to who gets the money, and the answer is obvious. Alan Greenspan was protecting the fed’s banking, big business and political interest by skirting the financial burden on the people, essentially socializing loss.

“Inflation is the most evasive and aggressive form of taxation it transfers wealth from the middle class to the privileged rich”. – Ron Paul


The Federal Reserve is falsely known as a politically neutral part of our government. This cannot be further from the truth on either count. As a private institution the Fed succumbs to the interest of its controllers and shareholders. The Federal Reserve, being the most secret institution in our country, can give undisclosed money to corporations and influence politics by adjusting (loosening) rates during elections. An example of this, which can be found in Ron Paul’s best-selling book “End The Fed”, is Arthur Burns (Fed Chairman 1970-78) attempt at seducing President Carter in 1976.

It is well documented that Arthur Burns, in an attempt to be reappointed, cut discount rates and accelerated money growth to alter the perception of the economy. He told Carter that reappointment would make him out to be a high minded statesman and suggested that if reappointed he (Arthur Burns) would stop criticizing everything near and dear to him (Carter). He failed and his intervention in the market brought on the worst bout of price inflation in a century and caused the democrats to lose the office to Regan.

People like this are the masters of our economy?

"Give me control of a nation's money and I care not who makes its laws"
-Mayer Amschel Bauer Rothschild (Rothschild family is the largest Fed shareholder)

The Audit

"Some people, I believe, think there is some sort of smoking gun or some sort of secrecy that the public doesn't know that goes on behind those closed doors and the reason why that is not one of my big issues is, I don't think they are gonna find anything. I know that the internal controls of the Federal Reserve are as tight as a drum, that’s what I learned serving on the Federal Reserve board for 5 years " – Herman Cain Minneapolis, MN on June 18th, 2011

Although they do have regular audits, the auditors are extremely limited in what they can actually audit which makes them irrelevant altogether. Contrary to Herman Cain’s claim that calling the Fed will provide all the answers, the reality is that all past requests for information have always been met with arrogance from Fed chairmen, turning them down, as if the requests were outrageous.

In 2009 Ron Paul introduced the Federal Reserve Transparency Act (H.R.1207), which requested a full audit of the Federal Reserve, the first in its 100 year history. It gained wide attention and support but what passed was Senator Bernard Sanders lite version titled Federal Reserve Sunshine Act (s.604), which demanded a partial audit, and here are their findings. (

The list of institutions that received the most money from the Federal Reserve can be found on page 131 of the GAO Audit and are as follows:

Citigroup: $2.5 trillion ($2,500,000,000,000)
Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
Merrill Lynch: $1.949 trillion ($1,949,000,000,000)
Bank of America: $1.344 trillion ($1,344,000,000,000)
Barclays PLC (United Kingdom): $868 billion ($868,000,000,000)
Bear Sterns: $853 billion ($853,000,000,000)
Goldman Sachs: $814 billion ($814,000,000,000)
Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)
JP Morgan Chase: $391 billion ($391,000,000,000)
Deutsche Bank (Germany): $354 billion ($354,000,000,000)
UBS (Switzerland): $287 billion ($287,000,000,000)
Credit Suisse (Switzerland): $262 billion ($262,000,000,000)
Lehman Brothers: $183 billion ($183,000,000,000)
Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)
BNP Paribas (France): $175 billion ($175,000,000,000)

Well Mr. Cain did they find anything? Was it counterproductive? How could you, bearing this knowledge, say the fed is not an issue? Mr. Cain, millions of dollars of this money, at our expense, went to the Libyan government and to Mohammar Quadaffi yet you still support the Fed?  

This secret stimulus inflates our dollar and thus is a tax on the people; our money went to these thieves by way of devaluation of our savings.

Ben Bernanke & Quantitative Easing:

Ben Bernanke is the current chairman of the Fed. He continues with the bad practices that Greenspan used. He continues the inflation of our currency and devaluation of the dollar, a direct tax on the people’s savings and earnings. Ben Bernanke believes that he can “fix” our current economic crisis by printing money; stimulus through quantitative easing. Essentially treating the illness with what caused it in the first place.

Quantitative Easing (QE) is another form of stimulus, an injection of money into our supply. QE happens as a result of artificially low interest rates. To better understand this process I urge you to watch this film QE Explained. This is Ben Bernanke’s secret (and only) weapon, and its proliferating the problem.

Private Counterfiters:
"Some people think that the Federal Reserve Banks are United States Government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders."  The Honorable Louis McFadden, Chairman of the House Banking and Currency Committee in the 1930s

Each of the twelve Federal Reserve Banks is organized into a corporation with shares. Those shares are sold to the commercial banks and thrifts operating within each of the twelve Fed Bank's district. The shareholders get to elect six of the nine the board of directors for their regional Federal Reserve Bank, they also elect the president. I urge you to look over which banks got bailed out and contrast them to the list below. Corporate interests at its finest.

The shareholders are kept mostly confidential, however author Eustace Mullins exposed some of the members in his bombshell book titled “Secrets of the Federal Reserve  Citibank, Chase Manhattan, Morgan Guaranty Trust, Chemical Bank, Manufacturers Hanover Trust, Bankers Trust Company, National Bank of North America, and the Bank of New York to name a few.

The Fed is guilty of secretly counterfeiting money and creating credit for private, corporate and political interest.


Herman Cain has been asked time and time again if he believes the Federal Reserve should be scrutinized or even audited and his answer is always a resounding “no”. During the Bloomberg debate Ron Paul asked Mr. Cain, if he still thinks the Fed shouldn’t be audited.

Herman Cain’s response:

“First of all you have misquoted me, I did not call you or any of your people ignorant. I don’t know where that came from so you gotta be careful of the stuff you find on the internet because that’s just not something that I have said. Secondly, when I served on the board of the Federal Reserve in the 1990s we didn’t do any of the things that this Federal Reserve is doing I don’t agree with the actions of this Federal Reserve. I don’t agree with the actions that have been undertaken by ben Bernanke. We didn’t have a $14 trillion dollar debt to prop up some of the actions they are taking and I have also said, to be precise, I do not object to the Federal Reserve being audited.”

A blatant, provable lie:

He claimed that it would be “counterproductive” to do so, echoing Fed chairman Ben Bernanke’s words verbatim. How can he say this when taking into considerations immoralities of inflation, stimulus, bailouts, political intervention and war funding? How can he endorse the secret nature of the Fed, while claiming to be a freedom loving American? It certainly cannot be because he is ignorant of the facts.

Mr. Cain also claimed that the fed wasn’t doing “the things that they are now” when he was Director of the Kansas City branch from 1992 to 1996, which is another blatant lie. Alan Greenspan was chairman from 1987 until 2006; his practices have always been the same. All of his predecessors’ practices were the same and his successors practices are the same. It’s the flawed Keynesian system that the Federal Reserve was founded on.

Regarding the comment about the $14 trillion in debt, that “we didn’t have” while he was Director. This was a direct result of the policies that Herman Cain endorsed, an accumulation of things including the tarp bailouts. Mr. Cain, if time and time again the government has been wrong in the allocation of our capital (nasdaq, housing, stimulus), then how can we trust them to be right in the future? How can we trust you?

The flaws of the Fed, the great depression and the current crisis can be proven syllogistically and down to central economic planning, the departure from the gold standard and Keynesian economics. The benefits of an elastic fiat currency allow for rich men to prop up their interests (often overseas) at the expense of the American people. It’s a morally corrupt system that claims ethical high ground, this moral high ground drives us into socialism.

It’s the American people’s job to stop encouraging the Fed’s existence by demanding benefits from congressmen that can only be produced by printing fiat money. We are neglecting our future and our children’s future and selling it out for the short term benefits of now. We encourage the Fed by supporting wars which could only be funded with an elastic money supply.

Often people make the reference that we should not “throw the baby out with the bathwater”. This is an ignorant notion as it cannot apply to a private institute with private interests. If the baby is the American Peoples interest, the baby has long since left the bathwater.


A major resource was my copy of Ron Paul's book End The Fed

Many more included through the document.


  1. Not that I like the FED but it does not pay most of its profit to its shareholders. 98% goes back to the treasury. Also the treasury issues money not the fed. It spends first then borrows.

    1. 98% goes back to the US Treasury you say? Why isn't it 100% of the profit going back to the US Treasury since supposedly 100% of the currency is supposedly owned by the American People. Why would a private institution get 1 red cent from something they do not own nor have the assets to back up in a loan. Less I forget about the fact most all illicit drug cartel money is laundered by Federal Reserve Banks but you won't ever hear of any arrests of Federal Reserve Bank CEO's for money laundering. Case in point. Wachovia/Wells Fargo laundered 350+ BILLION FRN's over just a 2 year period. Sources:,,, I could go in to a long essey about why the Founding Fathers warned about allowing a "Private" central bank to wrestle control of our money away from the people of the united states of America but you would just come back with some simpleton non-sourced rhetoric as a supposed retort to my factual statements. Oh heck I am going to state the Founding Fathers anyway:

      Thomas Jefferson wrote in 1825 to William Branch Giles of “a vast accession of strength from their younger recruits, who, having nothing in them of the feelings or principles of ’76, now look to a single and splendid government of an aristocracy, founded on banking institutions, and monied incorporations under the guise and cloak of their favored branches of manufactures, commerce and navigation, riding and ruling over the plundered ploughman and beggared yeomanry.

      Jefferson said in a letter to John Taylor in 1816, “And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.

      “Bank-paper must be suppressed, and the circulating medium must be restored to the nation to whom it belongs.” Thomas Jefferson to John Wayles Eppes

      George Washington, in letter to
      J. Bowen, Rhode Island,
      Jan. 9, 1787 “Paper money has had the effect in your state that it will ever have, to ruin commerce, oppress the honest, and open the door to every species of fraud and injustice.”

  2. Thanks Blog Rider,

    Regarding shareholders, I'll post my sources and investigate further.

    I understand that the treasury physically issues the money however its at the whims of the Fed chairman. I'll be more specific.