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What is the problem? I contend that the people occupying Wall Street do not understand the problem. If they did, they would be forming picket lines in front of the New York Federal Reserve bank at 33 Liberty Street. That is where the problem began in 1914. That is where the problem will be solved.
The less well informed will form picket lines in front of the representative agency of the Federal Reserve Bank of New York, namely, the Federal Reserve Bank building in Washington, D.C.
The power has never resided there. That is a symbol to deceive the Congress of the United States, which operates under the illusion that it is in charge of the Federal Reserve System because it is nominally in charge of the Board of Governors of the FED, an agency with national sovereignty.
The symbol of this sovereignty is the suffix to its URL: www.FederalReserve.gov. The “gov” ID is the mark of sovereignty.
The New York FED is where the decisions are made. Its URL suffix is “.org.” That is the mark of its legal incorporation as a private entity.
What is Wall Street? It is a street sign. It is a building. It is the headquarters of the New York Stock Exchange. Outside of the building is a sculptured bull.
In front of the bull these days are picketers. They are making a point. They don’t like the financial system. They think that the central core of the financial system is on Wall Street. It isn’t.
To understand how the system really operates, imagine that you are at a bull fight.
The matador is a conglomerate of very large banks. Today, there are four of them. They hold about 57% of the banking system’s assets.
Who is the bull? Stock market investors. Bond investors. Rich people who think Wall Street is the road to Easy Street.
From time to time over the last 200 years or so, beginning in 1819, this conglomerate has pushed the American economy into a series of booms and busts. The first major bust was in 1819.
The matador has been politically vulnerable on many occasions. It was vulnerable for a decade, 1929 to 1939. The bull got its horns into the matador a few times, not by demonstrations on Wall Street but in the halls of Congress. The government has imposed lots of rules and regulations after every stock market crash. As Dr. Phil asks his guests from time to time, after they have described how they have dealt with some terrible relationship issue: “How’s that working for you?”
In the good old days – pre-Eisenhower – the head honcho at the FED was the president of the New York FED. The last visibly powerful New York FED president was Beardsley Ruml, who was also the head of Macy’s. Ruml was rich, and powerful beyond belief. Wikipedia describes him well.
From 1922-29 he directed the fellowship program of the Laura Spelman Rockefeller Memorial Fund, focusing on support for quantitative social and behavioral science. He was an advisor to President Herbert Hoover especially on farm issues. In 1931 he became dean of the Division of Social Sciences at the University of Chicago – a center for quantitative research. He was not popular with the faculty and in 1934 Ruml became an executive of R. H. Macy & Company, parent company of the department store, rising to chairman in 1945. He also served as a director of the New York Federal Reserve Bank (1937-1947), and was its chairman from 1941 until 1946; he was active at the Bretton Woods Conference (1944) that established the international monetary system.
It was Ruml who persuaded the government to impose withholding taxes in 1942. the greatest expansion of revenue since 1914 – the income tax’s first year. Ruml was the real deal.
October 22, 2011
Copyright © 2011 Gary North