I have written about Federal reserve system many times in my blog and some people still don't really get what Federal Reserve is.  Most of people think that Federal Reserve is government agency or some kind.  However, this is further from the truth.  In this blog, I would like to explain what is Federal Reserve System in very detail.

First, I would like to explain surprising fact regarding to the Federal Reserve.  Section 7 of Federal Reserve Act says:


"After all necessary expenses of a Federal reserve bank have been paid or provided for, the stockholders of the bank shall be entitled to receive an annual dividend of 6 percent on paid-in capital stock".

 In other words, Fed is PRIVATE CORPORATION and there is no reserve.  Normally, when people write the check to the other people, whatever the amount they write in the check will be deducted from his or her checking account.  In other words, there must be a money inside of the account in order to pay to the other party.  However, when Federal reserve write the check to the government, there is nothing in their checking account.  They simply create the money out of thin air and lend the money to the government with interest.  In turn, government imposed all sort of taxes to the citizen including but not limited to income taxes, corporate taxes, sales taxes and many more so that they can pay the interest to the Federal reserve system.


So do you start to see what is really going on?  I will give you little more information about Federal Reserve System.  According to Guide to Investing in Gold and Silver by Michael Maloney:

  • Since 1914, we've borrowed every dollar into existence.
  • We pay interest on every dollar in existence.
  • That interest is paid to private bank, the Federal Reserve.
  • The world's largest banks, not the government, own the Federal Reserve.
  • The United States can't pay off its debt... it can only borrow more to pay the interest.
  • Our government created IRS to impose income tax to the citizens so that they can pay interest of the debt (When Federal Reserve was created, IRS was coincidentally created precisely the same day and no one can make this connection)


To sum up, our nation's wealth is sucked up by Federal Reserve System in following order:

1. US Government borrows money (debt) from Federal Reserve System

2. US Government imposes taxes to every citizen in the country.

3. US Government collects taxes from every citizen from the country and pays back the principal with interest to the Fed.

4. Shareholders of Fed will receive the annual dividend of 6% by the money they received from the US government.


Please think for a moment that government is only collecting the taxes from us.  In other words, we, as a taxpayers, are working hard just to pay off the monopoly money that is created out of thin air to the Fed.

After few years of study about Fed and global economy, I strongly believe that Federal Reserve System was created by design to enslave every citizen in the country.  As I have written on my past blog, education system, media and financial industry etc are all intertwined with this system (Please see the past blog: System by Design).  But, worst thing is that most of the citizens in this world have not even realized what is really going on.  I can surely expect that life of most people will be worse and worse as time progresses because the more Fed prints money out of thin air, the more people needs to pay off the debt they creates via either actual tax or insidious hidden tax: inflation.

As I mentioned many times in my blog, I am not doom and gloom guy.  You don't have to be one of them.  Even better, you can even take advantage of this situation to get ahead financially (All of the strategies I have been using are posted throughout my website).  Remember there are always two sides of every coin.  If you can see the opportunity and come out to the other side of the equation, you may be able to obtain massive wealth.  But, financial education is the must in order to survive and even thrive this turbulent time.


P.S: I wrote new article about real estate investment deals with NO MONEY DOWN.  This entails how to invest in real estate deal with almost none of your own money. 


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