Money, Banking, and the Federal Reserve 

You know this is going to be a good video when Lew Rockwell is already outright saying there is no difference between the fed and a burgler

I am really worried about the current bank crisis/interest rates, these are all the signs of yet another 2008 market crash 2.0 , so my question is do I still save in the United States dollar or is this a good time to buy gold?

Recession is often the result of external factors, and it appears that the United States is losing its grip as a federal reserve currency. With a decreasing ability to control inflation and a reduction in stocks and oil trading, it seems that a new multilateral world order is on the horizon.

15 years… WOW. And it is still one of the best videos in RU-vid. They predicted literally everything.

History repeating itself once again 2020

Isn't it interesting that the Federal Income Tax coincided with the introduction of the creation of the Federal Reserve...

So this video, created 18 years ago, exactly called out all the problems and precisely predicted exactly what would happen as a result of continued Fed theft. Amazingly bad luck.

Insightful video. I just want to know best how people split their pay, how much of it goes into savings, spendings or investments. I'm 27, and earn nothing less $150k per year, but nothing to show for it yet.

"If the American people ever allow private banks to control the issue of 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

I've probably shared this video over 100 times over the years. I've turned so many people on to destroying the FED thanks to this video. good job mises.

Almost 8 years later and this video is truer than ever.

I was a Keynesian until I picked up a copy of Tom Woods book on the 2008 recession. Almost by accident. There was something about its message that resonated. So I looked into it a bit more by reading Rothbard and others associated with the Mises Institute. Having studied and taught political economy for several decades I’m quite familiar with the field. And it is clear that the Austrian analysis fits events around the business cycle better than any other perspective

" It is well enough that 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

"I sincerely believe that banking institutions having the issuing power of money, is more dangerous to liberty than standing armies." ~ Thomas Jefferson "The government should create, issue, and circulate all currency. Creating and issuing money is the supreme prerogative of government anf its gretaest creative opportunity. Adopting these principles will save the taxpayers immense sums of interest and money will cease to be the master and become the servant of humanity." ~ Abraham Lincoln

yay Dr. Ron Paul!

To those that own the current financial system, life must be good. Imagine being able to create money out of nothing, charge interest on it and have the power to take tangible property from people who can't repay this imaginary debt. I still find it amazing that some people are unaware that the majority of 'Central' banks, are privately owned and charge interest on every dollar/euro/pound produced, thus creating the 'national' debt.

I watch this at lease 50 times...

Imagine this. You walk into a bank where you’d like to deposit, looking to see what savings plan is available. You are told by the pretty counter staff you can deposit, get paid with interest PLUS withdraw money at any time. Most nod, but rarely do they ask, “How can the borrower of your money be able to return the money on the day you want it back?” The account lady will simply say, “We keep money on reserve.”

If only this was shown in public schools 😢

Fun fact: 22% of all USD ever created was created in 2020.

17:07 Han" Physical Removal" Hoppes

The music absolutely makes the video! It's so perfect, it almost tells the story.

This should be made into a movie at the box office for the average citizens

1M views in 17 years? The most useful/important tool in society and this is all we get. Shame on us.

⛔✅ *Anyone looks this in 2019? If "Yes" then why no changes were applied?*

Great points! In Europe they have the ECB,but every country controls its own fiscal policy,which makes it difficult to rein in exorbitant borrowing. In the US, fiscal and monetary policy are both a federal purview. Imo,if the Euro is going to survive,it will have to adopt centralized fiscal policy. You're right people are typically not willing to put the effort in to learn. It took me years, and hundreds of hours to learn monetary economics. And i still consider myself an amateur economist. =)

Thanks for posting this! My library was clean out of this title!

Just discovered this video. What a gem!!! And it’s also funny to see everyone so young.

Very enlightening, if only they concentrated on showing this in school as opposed to the usual economic crap!

WOW! RON PAUL FROM THE 90'S!

iknow all about it man , seen the video a thousand times, im following videos from the Spirit science channel right now, its contents are truly amazing.

This documentary has such clarity. It's just like reading Murray.

All-time best video explaining the history of the banking system in America. Made in the late 90's, and seemingly for a highschool class, this is the single most informational (without the frills) documentary that I have seen on the topic to date...

FED history repeating since 1913 until today 2023

Thank you so much for posting this!!

One interesting thing that occurred during the 2008 financial crisis is that the Fed started accepting Mortgage Back Securities along side of Treasury Securities. They abandoned the "bills only" policy. The Fed essentially liquidated the bad assets (MBSs) from AIG, Lehman and Bear Stearns. On the Feds balance sheet, all the bad assets are located in three companies labeled Maiden Lane LLC 1-3. Very interesting stuff. =) federalreserve(.)gov/monetarypolicy/files/BSTcombinedfinstmt2011.pdf

Loved this vid! Old, informative, retro kind.... :)

Interesting vid. TOTALLY ruined by the foreground music. Absolutely horrible.

40:37 "...there are no restraints on the Federal reserve..." That right there is the best argument for Bitcoin.

the fact that this video was made just before 2008's recession is amazing

Audit the FED!

Am I a nerd for thinking this video is awesome.

Thanks Balanced. I think we will see the emergence of preeminent Eurobonds and maybe the conversion of sovereign debt into these over time. It will be interesting to track the transition. Much depends on the politics throughout the region and the interplay between the major players France and Germany. I cannot emphasize enough to everyone on this board, the importance of education in basic economics and finance if you want to understand the world around you.

In my teaching I describe the Federal Reserve Note as "a promise to pay nothing in particular." Although history provides the example of the original Bank of Amsterdam as a bank of deposit, there are problems associated with the mining, refining and secured storage of precious metals as backing for paper currency in circulation (or, the electronic balance equivalents owned by a bank depositor). Yet, there is an even more powerful destructive driver in all economic systems (continued)

I hope and prey Trump tells the FED there services are no longer needed. Oh and the tax payers dont owe you a dime!!!! Who are these people?? Who owns this private business rapping us all. Pisses me off thinking about this

This is what kids in high school should be studying instead of sex ed

This was great. Thank you. :)

Great points! Another problem I see with growing gov is what we see in Greece. Gov spending became such a large part of GDP, that it actually became the chief driver of aggregate demand. Now, when they need to cut spending, it drastically affects demand, causing further decline in output. They're in a catch-22, no way out but economic catastrophe "BUY GOLD NOW" I'm not sure about this. One of the reasons you see so many commercials to buy gold is because the smart investors are selling it. ;)

my god ! i cannot hear anything because of this high volume of music terrriblleee crushing the documentary !

One of the must-see videos in RU-vid.

When/what channel was this originally aired?

Great analysis on the part of a single commodity, it came about during 1944 known as the Bretton Woods Agreement, a re ratification of the Genoa Accords international agreement in 1922, which created the International Monetary Fund. It was previously known as the gold exchange standard. What governments call monetary cooperation is simply well put from your thought, a concerted action for the sake of credit expansion.

Banks don't report their financial earnings to the 'irs.' Why I ask my self?, I earn 100k a year, and I have to pay back🤔😔

20:49 Prescient - in our day, the inflation is being blamed on “supply chain” breakage…. Which is orchestrated by a variety of shadowy actors

17 Years ago, ancient in RU-vid terms.

@Sm3rti I like that you distinguish between deflation in a fiat system and deflation of prices of a commodity. This is also the distinction between production and "means of exchange." For example, the 2011 trading range for gold was $1319-$1895, or 30%, ending the year at $1531. The range for the U.S. dollar index was 72-81, or 11%. The value of the commodity(gold) was far more unstable in than the value of the dollar, because gold is floating inside the dollar framework. get it? ;)

END THE FED!

Lol video was made in 2006 wonder how they would feel about the bank bailouts...

17 Years ago !!!!! Fascinating Probably one of the most important videos in human history We can do nothing unfortunately Nothing ever happens, Lincoln, JFK....

Such a crucial issue! We must spread the word and stimulate more rational collective thinking and efforts to uncover the unjust.

its literaly a peramid sceme

I think this mises institute might be on to something :D

Yes! Friedman was a huge critic of the Fed system, but he also was a critic of a gold standard as well. His rules based system is a seldom discussed alternative to the current fed system, but allows for the elasticity of money that modern economies require. If you would like, I can email a copy of A Program for Monetary Stability to you. It is a quick read, and Friedman writes in language that is easy to digest, for economics. If anything, the chapter on banking reform is excellent. =)

Hey there man, nice vid that you have here. Keep in touch.

Taco cat spelled backwards spells taco cat

Part 3: The Federal Reserve states that "the financial statements of the Federal Reserve Banks and the Board of Governors are audited annually by an independent outside auditor."[6] The bill's sponsor, Congressman Ron Paul (R-TX), counters by stating that the present audit process exempts the Fed's "most crucial activities".[7]

The value of our money has indeed been decreasing over the past several years. This is an interesting presentation of why that has occurred.

Wow! Thanks for all the informed comments! So many don't understand the Federal Reserve. I have a question though. Treasury securities are sold to every type of investor; bank or Individual. When the Fed buys a security from a bank,it is exchanging an interest-bearing note for liquidity,which just sits there until it is lent. How does this funnel wealth to banks when they are giving up a treasury note with a higher interest than the federal funds rate? I need to understand this better. =)

BITCOOIIIINNNNNN........

If we go back onto the gold standard wouldn't foreign governments, like China, just trade in all of its debt for gold and then we would quickly run out of gold and then what? Our current debt is way higher than our gold reserves so then what should we do?

Excellent video. This should be shown to young adults, but well knowledge is oower and ignorant and depressed people are easier to rule. Incredibly well made and concise documentary. Thank you a lot!

Who is the economist that Lew refers to at 7:50? Something Webster?

Stop the music!!!!!! AHHHHHHH!!!!! My A.D.D. can't handle it!

End the Fed!

Agreed! Whatever the best solution is,you and I agree that any REAL reform would put an end to fractional reserve banking. Sadly,no one is going to challenge this anytime soon. =( "The State literally issues a license to print money" The Fed doesn't really "print" money. It exchanges an interest bearing asset owned by a bank, for a bunch of dollars. The limits of gov borrowing is still largely set in the market. In Greece,the market doesn't trust them,so their borrowing costs are exorbitant.

It hasn't been OBJECTIVELY audited. And neither has Fort Knox.

Annoying music interferes with whispered information

From Black's Law 4th ed. p. 1157 (1951) Money. In usual and ordinary acceptation it means gold, silver, or paper money used as circulating medium of exchange, and does not embrace notes, bonds, evidences of debt, or other personal or real estate. [Note the error that any third grader would recognize: Money is “paper money.” This is an error known as circular logic and would and should be recognized by everyone, including judges, attorneys and politicians and it should never be allowed as a defense of law in a moral/ethical/honest society!] In its strict technical sense, “money” means coined metal, usually gold or silver, upon which the government stamp has been impressed to indicate its value. [This assumes the validity of political governments which are based on violence. Hence, “strict technical sense” and the prejudice for “government stamp” betray a glaring mistake in approval of government sanctioned violence, force or aggression! Thus, this assumption leads down the garden path of fallacious reasoning, i.e. evil, wickedness of government force is justified and that might makes right is the only way that money can be coined or created and that of course means one is then a stinkin’ slave on the plantation state of masters/politicians and overseers/enforcers/judges et.al. and that of course is immoral, illogical. Value is subjective and therefore government cannot “fix” it. Value depends on time and place, i.e. it has temporal and geographic properties. Again, fixing “value” is a logical fallacy. Also note that money is coined not printed, i.e. “paper money” is not real money as one cannot “coin” paper!] Definitions are important so as to mitigate misunderstandings, i.e. accuracy in communications is necessary so as to avoid catastrophes. Definitions, so far as possible, should be discriminatory, quantitative, qualitative and segregatory, e.g. the color “red” discriminates when one describes the colors on the flag of the United States, i.e. it does not mean “blue” or “white.” Color codes for electrical wiring are critical. Traffic light colors are rather important, too.] 1 Corinthians 13:11- 13 11 When I was a child, I spake as a child, I understood as a child, I thought as a child: but when I became a man, I put away childish things. 12 For now we see through a glass, darkly; but then face to face: now I know in part; but then shall I know even as also I am known. 13 And now abideth faith, hope, charity, these three; but the greatest of these is charity. Ephesians 5:6 Let no one deceive you with empty words, for because of these things the wrath of God comes upon the sons of disobedience. Just Weights and Measures Divers weights, and divers measures, both of them are alike abomination to the LORD. Proverbs 20:10 King James Bible A false balance is abomination to the LORD: but a just weight is his delight. Proverbs 11:1 Divers weights, and divers measures, both of them are alike abomination to the LORD.Shall I count them pure with the wicked balances, and with the bag of deceitful weights? Micah 6:11 Just balances, just weights, a just ephah, and a just hin, shall ye have: I am the LORD your God, which brought you out of the land of Egypt. Leviticus 19:36 Deuteronomy 25:13-16 13 Thou shalt not have in thy bag divers weights, a great and a small. 14 Thou shalt not have in thine house divers measures, a great and a small. 15 But thou shalt have a perfect and just weight, a perfect and just measure shalt thou have: that thy days may be lengthened in the land which the LORD thy God giveth thee. 16 For all that do such things, and all that do unrighteously, are an abomination unto the LORD thy God. biblehub.com/kjv/deuteronomy/25.htm Paper Gold “Said the crawling peg to the dirty float We’re two lost souls in a leaky boat. And down below there’s a hole in the hold That can’t be plugged with paper gold.” My 2 cents: When people speak of "money" it is well to keep in mind the characteristics or criteria that define real money: 1. easily transportable 2. easily divisible 3. resistant to physical and chemical damage. 4. store of value, not subject to severe inflation (even precious metals suffer this) 5. intrinsic value, a use beyond just a claim check or place holder, sustains life 6. universally recognized and accepted, i.e. people must have confidence in it 7. rarity, not easily found, discovered or synthesized 8. difficult to counterfeit and efficiently analyzed 9. defined in writing, full disclosure 11. easily measured for weight and purity or authenticated 12. It should not be easily monopolized by anyone or any political government I recommend James Ewart’s book, “Money,” and Ralph T. Foster’s book, “Fiat Paper Money.” And in the September 1895 American Federationist, Stephen T. Byington assailed the money monopoly: "No legal tender law is ever needed to make men take good money; its only use is to make them take bad money. Kick it out!"

What is a young man to do who has a desire to help himself, by helping those around him?. What is one to do with a thirst for knowledge and a drive for dealing with people, for helping others?, I know I am not alone, but how to get to those to share idea's??? I haven't had a teacher since I was a child and I can remember so little of their direction. Although disillusioned with the fact no high school student I know, knows of the federal reserve or of Nicolas Tesla. Despite who or what may be culpable we must look into ourselves, recognize our mistake and improve the situation. No one wants to say I screwed up, no one wants to work harder to fix the mistakes of the past it seems. That, is what is truly breaking me heart.

My point was that adopting Mr Paul's ideas would not eliminate the need for a central bank, because the root of the problem is reserve lending,NOT what backs a currency. You can use gold and silver to exchange your goods now,no one is stopping you. There is no law against it. Go trade all your dollars in for gold coins,or silver certificates. The freedom is already there. Some communities in the US even print their own fiat notes. usatoday(.)com/money/economy/2009-04-05-scrip_N.htm

cool it with the anti semitic remarks ;)

I would like an unbiased documentary please

What is the beautiful music at around 4:47?

@cbasallie Also, check out the Wikipedia entry for FRB. It has a table that shows how new money is created from an original reserve. The "glitch" i talk about comes from the way we keep track of dollars. When credit money is spent the store deposits the $ into their bank. Bank1 who lent the money accounts for loan money as deposit. Bank2 also counts the loan money as deposit. Banks can't track the original dollars, so they manage the money-multiplier inside of monetary policy. =)

The single greatest fear, I have ever had, is for history to repeat its destructive policies, and the people, my own self included for a while, would ignore such important information. What have we become, when a former hoodlum, from Brooklyn, actually steps out, starts with the Roman era, various periods in the "middle ages", to modern history and heavy study of federal reserve and of what our former leaders were truly fighting. The true fight is not against foreign aggressors, or communist, or even directly against the banks. Its against the people indifference and lack of foresight in affairs such as these. Its the heavy manipulation of our very way of thinking. But I wonder if it was some evil man who dumbed down our system, or if it was a cost effective mistake of some lower level moron. All I know, is I'll give my life to help my people, and to bring attention to all done in the dark.

So objectively, gold is intrinsically valuable. But I don't care much for gold myself. I think it gaudy. It smacks of "ill gotten king pin" wealth. I much prefer magnesium as it can flare up when lit by a naked flame, providing hours of entertainment, as we will need it when the "money" supply runs out. What? You wont accept magnesium for your house because your subjective value of gold is higher than my subjective value of magnesium? How is your subjective value more valid than mine? Who made you dictator? Oh, yes, "society" values gold. The collective deems it valuable.

@tjtomkins I am curious to the process details of a gold system. Does physical gold circulate, or is are gold-backed notes? Would governments or banks have "right to first refusal" on new gold produced? I honestly don't have a clear picture of how a transition from the current system would occur. =/

@TheBalancedAmerican OK I'm understanding that. I think.1) What if then, checking and savings accounts were backed by gold? Would that be something like having 100%RR on checking and savings accounts while still allowing some flexibility on investment/lending? Another question is this....2) why can't a bank make money on 100% RR when you consider that they 're earning interest? In this way the earnings of the bank would be interest $ and checking fees. How is that a problem?

Bitcoin is a good business anyone can think of doing. I trust bitcoin.

@tjtomkins Yes, I know. That is why a typed the "..." into the quote. I replied to your reply. I just wanted to make clear, that the mining of new gold in response to a deflation (=appreciation of gold) is not the best argument you could direct against the claim that deflation is bad. The best argument is to say what I have said and to stress that the badness of modern deflation is due to the uncertainty in a fiat money system, uncertainty which disappears in a gold standard regime.

i agree with most of those points. I merely stated the need. I agree primarily with Dr. Paul however. His plan to phase out the Fed and not dissovle them instantly is the best one. As competing currencies outdo the federal reserve note, watching them decline into complete irrelevance is a sweetness unrivaled by most things i could think of.

@tjtomkins I definitely see your point. Especially the "most indebted country in history" point. But let me play devil's advocate: If we are making our judgment based on the progress of our nation, then the last 100 years are certainly the best example of rapid development. We have moved from horse & carriage to F-22 stealth aircraft. From the telephone to the internet. From a life expectancy of 50 to one of 80. From a position of isolation, to world political & economic dominance

The initial pump money comes from when a central bank, case being the Fed, buys an interest-bearing asset that is legal for it to use in its reserve. Legally, it can buy from ANY entity, but it usually buys the US Government Debt, by creating the debt to buy the IOU, the Fed injects original money into the economy with printed debased money in the system. And the fractional reserve process begins the money multiplication process. Ending only with higher debt for all. How it's working right now.

Part 2: It strikes exceptions to the audit protocol in 31 U.S.C. § 714 for the Federal Reserve System, the central bank of the United States, and replaces an indefinite deadline with a deadline of December 2010.[3] It also ensures the audit results are available to Congress.[4] The audit would include the Fed's "discount window", its funding facilities, its open market operations, and its agreements with foreign bankers.[5]

Excellent choices in music! (beside the content of course)

This 1 video would of been an asset for the average person in the public school system

@nowthatsinteresting1 I understand the money-multiplier very well. In the US, our Reserve requirement is 10%, making the multiplier 10. I thought the UK was 3%, but I haven't looked in a while. The reason i call it a "glitch" is because as far as banks know, they are lending dollars in their vault. The multiplier isn't a result of the lending side. It's the result of depositing loan money into another bank. The "glitch" is in accounting for the transactions between banks.

this was very good. thank you

@Sm3rti Your "cars" example isn't related to monetary frameworks is because the quantity of fiat currency represents all products and services. This is why the dollar remains relatively stable while the value of gold fluctuates. Linking currency to a single commodity, ties it to the fluctuations in subjective value of the asset. In our debt-based system, new money(inflation) is only added to the economy when your car company needs to finance the new factory. Not from economies of scale.

@tjtomkins I mention these moderations in an above post. I didn't call them term-deposits, but they are essentially deposits that are focused on investments; bonds, money market accounts, etc. I definitely support a 100%RR on all standard checking and savings accounts. =) Only thing I'll add is, even with a 100%RR on demand-deposits, reserve lending of investment capital would still result in a money-multiplier, and debt-based inflation.