Rouble Nationalization – the Way to Russia’s Freedom. Nikolay Starikov

nature: The Fed is a mixture of public and private elements.[19] This phrase is rather misleading – a bit like what they say about mixtures of raisins and nuts. Can such a phrase be found on a governmental institution website? Say, at the US Navy website? Or on the US Air Force website? Even the National Guard cannot say that it is a 'mixture of public and private elements'. Because the army, navy and police in the USA, as anywhere in the world, are run by the state. Whereas the organisation that issues American money is not. We do live in a strange world! Although, what is so strange? Who controls the wallet controls everything.

      You can often hear statements that the Fed is controlled by the US government, which, allegedly, makes it a state organisation.[20] Refuting this statement is very easy. All it takes is to look at the founders of this institution. The Fed was established by twelve Federal Reserve banks scattered across the USA. It would seem that the Fed is a federal organisation since it consists of federal banks. But this is just a facade, a mimicry. There is not a single state-run bank in the USA! All the banks that have the word Federal in their names, were actually established by ordinary commercial banks which had been grouped according to their location. And who are the founders of American commercial banks? Via a chain of companies, shares, trusts and funds, it is always INDIVIDUALS. Therefore, the twelve Federal Reserve banks comprising the Fed are owned by unknown individuals, and not the American state. And each of these twelve Federal Reserve banks has the right to issue dollar bills.[21] If you are curious, you can take a note you have and read where it comes from.[22]

      For an outsider, all proprieties are observed. An illusion is created that the Federal reserve is controlled by the state, although it is actually independent. It is about the independence of the Federal Reserve that you will read in all reference books. And it will be presented as a great advantage. The Fed is an 'independent financial institution established in order to function as the central bank and perform centralised control over the US commercial bank system'.[23]

      So, what is the Federal Reserve System independent from? From the government. This means that the President of the United States has no influence on the policy of the Federal Reserve. Otherwise, what independence are they talking about? If the head of a corporation can appoint or dismiss the head of one of the companies within its corporate group, we can hardly talk of any independence. And if the head of the corporation has no right to dismiss him or make him to pursue a policy needed by the group, what kind of head of corporation is that? This is not authority any more but mere illusion. Similarly, speaking of the independence of the Fed on the one hand and of the control exercised by the state, on the other, is creating an illusion. One cannot be slightly pregnant, it is either one thing of the other.

      The essence is simple: in the capitalist world everything is decided by shareholders, that is by owners of companies. If they want, they can appoint a CEO, otherwise, they can give him the sack. No American president could make Coca-Cola or Pepsi shareholders dismiss or appoint the CEO of these companies because neither he, nor the American government owns the control stock of these organisations. The situation with the Fed is similar. How many shares of the Federal Reserve System belong to the American Government? None. How can the President appoint or sack the head of the Fed? He cannot.

      It does all look decent though. The Federal Reserve banks establish the governing body of the Fed, called the Board of Governors, and delegate one member each.[24] Each member of the Board of Governors is appointed for a term of 14 years.[25] These Governors then elect the Chairman of the Fed. He is appointed for four years and the US President confirms him at the position.

      What do we see? This is an imitation of subordination. This is what you will find in the book written by the Fed Chairman, Alan Greenspan: 'Federal Reserve System, formally independent from the White House'.[26] What is informal dependence then? In a world where the whole management structure is strictly vertical, such dependence simply does not exist. No structure has one. There are always superiors and subordinates, ordered according to the staffing establishment, law or criminal practices.

      We are dealing with an imitation. An imitation of formal subordination. Going back to the Coca-cola example, its shareholders can write in the corporate charter that every CEO has to be confirmed by the President of the United States. The head of the White House does not own any shares and therefore cannot vote. But he is granted the honourable right to sign the confirmation of the head of the company. The situation with the Fed is exactly the same because the appointment of the Fed Chairman is the most important appointment in today's world economy and hierarchy. Far more important than that of the US President.

      You will also read that the FRB is accountable to the US Congress. But this is an imitation as well. It is as though the head of the Coca-Cola company made a statement in Congress and members of Congress heavily criticised it for the high concentration of sugar in the drink and for using the plastic packaging. What could they do apart from criticising? Nothing – Coca-Cola would continue to produce the same drink, with the same concentration of sugar and in the same packaging. In a similar manner, the FRB is accountable to Congress for its performance. And members of the Congress can criticise the organisation as much as they please, they can stamp their feet in anger and blame them for causing the recession and bad performance but it would have no legal implications.

      As a result, we get a very peculiar image.

      The main money for trading and main money for saving on the global scale is issued by an organisation owned by an unknown group of private bankers. But why should we care about the USA and the rest of the world – we should be primarily interested in our own country. It is high time we discussed the rouble. Let us look at it. Let us read what it is written on it. This is something that an ordinary person in everyday life never does. We are, frankly speaking, only interested in the value of the bill and not in what it says. Now, let us have a look. A note of the Bank of Russia'. Does it mean that the note was made in Russia? Geographically, yes. And de jure – no. Why? Remember the Federal Reserve System that issues green dollars with portraits of American presidents, an independent Central Bank, independent from the state. Is the Russian system the same?

      In order to understand it, let us read the law on the Central Bank of Russia (Bank of Russia).[27] Let us start with the simplest question – who issues roubles? This is easy – the Central Bank of Russia, also known as that Bank of Russia, has the monopoly on issuing the Russian national currency. This is exactly what article 4 of the law says: 'has the exclusive right to issue cash money and organise its circulation'.[28] Does this sound sensible? Yes, there should be only one issue centre. But what is it controlled by? In order to find out, we carry on reading. The most interesting article in the law on the Russia Central Bank is probably article 2. It contains so much information that one needs to read it at least twice. Let us look at it as a whole and then examine the details.

      Article 2. The registered capital or any other property of the Bank of Russia is considered federal property. In accordance to the goals and in the order specified by this federal act, the Bank of Russia exercises the authority to possess, use and dispose of the property of the Bank of Russia, including the gold and foreign currency reserves of the Bank of Russia. Withdrawal and encumbrance of the aforementioned property without consent of the Bank of Russia shall not be allowed, unless specified otherwise by a federal act. The state shall not be liable for the obligations of the Bank of Russia, and the Bank of Russia shall not be liable for the obligations of the state, unless they have taken such obligations or unless otherwise specified in federal acts. The Bank of Russia undertakes its expenditures by means of its own profits'.

      So, what belongs to the state? The property of the Bank of Russia. That is – the real estate. Furniture of all sorts, chairs and suchlike. Wallpapers. Pens and computer mice. Turntables in microwave ovens. Is that it? No, it is not. There is also the 'registered capital' of the Central Bank in the amount of three billion roubles.

19

http://www.federalreserveeducation.org/fedl01/structure.

20

You will find more information on establishment, structure and functioning of the Fed in my book called 'Crisi$: How is It Organized', therefore we will not go into too much detail here.

21

Banknotes and coins of the Federal Reserve System of the USA: Reference Book. Moscow: IPK 'InterKrim – press'. 2008. P. 10.

22

Each Federal Reserve bank is assigned its own number and letter. If you look at the front of the banknote, you will see the mark below the serial number on the left side of the note: A1 – Boston, B2 – New York, C3 – Philadelphia, D4 – Cleveland, E5 – Richmond, F6 – Atlanta, G7 – Chicago, H8 – St. Louis, 19 – Minneapolis, J10 – Kansas City, K11 – Dallas, L12 – San Francisco.

23

http://rosfincom.ru/news/1849.html.

24

Thus, the issues of the financial universe on the global scale are resolved by thirteen people: a banker from each of the twelve federal reserve banks plus the Chairman of the Fed.

25

www.federalreserve.gov.

26

Greenspan A. The age of turbulence: adventures in a new world. New York : Penguin Press, 2007.

27

The principle of the so-called 'independence' of the Central Bank is the basis of the world economy. It is this burden that pulls it downwards, to the bottom. We will study the situation using Russia as an example. But if you, my dear reader, start studying the law on the Central Bank of your own country, you will find the very same things in there.

28

http://base.consultant.ru/cons/cgi/online.cgi?req=doc;base=LAW;n=35977.