Academic journal article Academy of Educational Leadership Journal

Fed Conspiracy Used in Teaching Money and Banking

Academic journal article Academy of Educational Leadership Journal

Fed Conspiracy Used in Teaching Money and Banking

Article excerpt

ABSTRACT

This paper examines how a Federal Reserve "conspiracy theory" booklet, Billions for the Bankers, Debts for the People, can be used at the end-of-the-semester in a money and banking course. Readings such as this one are commonly available from various distributors and also exist on various web sites. Much of the knowledge and many of the economic concepts learned during the semester can be applied to this and similar readings to explain how some parts of these conspiracy readings are based on fact, and how the addition of some creative thinking along with these facts can create conspiracy theories.

INTRODUCTION

There exist a number of publications, many that can be rapidly found by searching the Internet, on the Federal Reserve System (the FED) being a conspiracy of wealthy bankers. It is charged that these bankers (being the same thing as the FED) created, among other problems, wars, recessions/depressions, inflation, and debt in order to increase their profits (American Institute for Economic Research, 2004). These writings are partly grounded in fact, such as the FED being owned by commercial banks. From these facts along with some creative thinking, FED conspiracies have been developed. (Edward Flaherty describes some of the major myths of FED conspiracy theories in Debunking the Federal Reserve Conspiracy Theories. Also note that no articles came up using ECONLIT under Federal Reserve Conspiracy.) Fed conspiracy theories are more common in certain parts of the U.S., where there exist more extremist-type groups, such as north of Idaho State University, where I teach. And, the Salt Lake City Federal Reserve Branch has (or have had in the recent past) free pamphlets to debunk these theories. Not all Federal Reserve Banks feel that it is necessary to have these pamphlets.

In this paper, I look at such a reading: Billions for the Bankers, Debts for the People, written by Sheldon Emry, that I have my money and banking class read near the end-of-the-semester and then discuss in class. They discuss how some facts are enhanced to come up with these conspiracy theories. Billions for the Bankers, Debts for the People (here after as BBDP) was published in 1989 (it appears earlier editions exist) by America's Promise Ministries, Sandpoint, ID. It is not copyrighted, so that "it may be reproduced in whole or part for the purpose of helping the American people" (Emry, 1989, p 1). BBDP was easily found on the Internet and seems to be one of the classic FED conspiracy readings.

BILLIONS FOR THE BANKERS, DEBTS FOR THE PEOPLE

When the students read BBDP, they are suppose to critically analyze these theories from what they have learned in class during the semester and discuss what part the these theories are true and what part really does not make sense from what we covered during the semester. BBDP is about 26 pages long, so below I will cover only some of the major points of the booklet. In what follows, I have typed in bold some quotes from BBDP, followed by the kind of analyses that I expect from the students. (Note that I use Mishkin's The Economics of Money, Banking, and Financial Markets as the class textbook). In this analysis of BBDP, I have tried to rely heavily on Mishkin's textbook, since it has material that students should be able to use from being in class during the semester.

The Great Depression and World War Ii

An adequate supply of money is indispensable to civilized society.... Remove or even reduce the supply below that which is necessary to carry on current levels of trade, and the results are catastrophic (Emry, 1989, p. 3).

Here, Emry states a basic, accepted economic principle that money serves as a medium of exchange and without it, we would have a barter economy, which would greatly reduce economic output.

In the early 1930's, Bankers, the only source of new money and credit, deliberately refused loans to industries, stores and farms. …

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