Can You Sue the Federal Reserve?
If the Federal Reserve fails to carry out its mission as dictated by Congress, why do we have a Federal Reserve?
Have you lost money in the stock market, in the value of your home or a decline in the value of any other investment over the last two years? Almost everyone in the United States has lost money over this time frame. The question is why has everyone lost money? It’s one thing if a particular investment lost money due to bad management or a bad bet on commodity prices or fraud or simply overpaying for a home or other investment. But when almost everyone loses money on almost every investment they buy something systemic is wrong.
What’s wrong is that the Federal Reserve has failed over the last two years to do what Congress charged it to do in the Federal Reserve Act. The Act, “Provided for the establishment of Federal Reserve Banks, to furnish an elastic currency, to afford means of rediscounting commercial paper, to establish a more effective supervision of banking in the United States, and for other purposes.”
Over the last two years most of the banks in the United States comprising the banking industry in the United States have taken continual massive write-offs. Obviously the Federal Reserve was not effectively supervising banking in the United States as it was charged to do by Congress in the Federal Reserve Act. As the banks have taken these massive write-offs money has continually been lost from the economy. As money has been lost all money still in existence in the economy became more valuable in the same way that continual losses in the world’s gold supply would cause gold to become even more valuable. Except that unlike gold, which must be mined, the Federal Reserve can create new money to replace the lost money at any time. Failure by the Federal Reserve to create this new money to replace the lost money causes our currency to become inelastic.
When a currency becomes inelastic people and businesses will change what they do with their money. They will slow their spending and borrowing of it. Nobody wants to spend or borrow money that is rising in value. This causes consumption to decline and that causes economic contraction and higher unemployment levels. As consumption declines investments lose their value. The inelastic currency caused by the loss of money in the economy caused investments to lose their value.
Since the Federal Reserve was charged by Congress, “to furnish an elastic currency”, and the Federal Reserve has failed to do so and that failure has caused investments to lose value doesn’t that make the Federal Reserve liable for the investment losses? (Sorry Bernie Madoff victims and all other Ponzi victims this does not apply to you. You were defrauded.) As long as it can be shown that investment losses were a direct result of the Federal Reserve’s failure “to furnish an elastic currency” the Federal Reserve is liable.
Thankfully I am not a lawyer but I have been involved in class action lawsuits involving investments in the past. Most notably against Topps trading card company when senior management sold tons of stock just before disclosing bad news about the company. I received a not insignificant sum from this settlement. And from the Nasdaq market makers (including I believe Bernie Madoff’s firm which was a big Nasdaq market maker. Madeoff was always a crook taking extra nickels and dimes per trade before he started taking millions adding up to billions from his Ponzi scheme) for improperly marking up Nasdaq securities prices.
Could a massive class action lawsuit against the Federal Reserve succeed? As long as it could be shown the Federal Reserve is liable for failing to carry out the law as dictated by Congress I believe it could. And I believe that can be shown. The hardest part would probably be getting a court to even consider such a lawsuit. And then to not have the lawsuit tossed “for the good of the country.” Here it could be argued that the good of the country would be served by forcing the Federal Reserve to make up all the investment losses which the Federal Reserve would have to do by printing money and that money would replace much of the lost money in the economy from the bank write-offs and that would make our currency elastic once again.
This article is very thought provoking. I was thinking about this the other day and decided to do a little research on the matter. I wonder though, who would we have to appoint to file this lawsuit? They would have to have money, because fighting is costly, and I would be scared to invest so much in something that wont budge. Alan Greenspan seems to think the Fed Reserve is above the law anyway, and no one can regulate them. Why hasnt an audit ever been performed? Why arent people worried about this? Why are people letting us even have a Federal Reverve, there is nothing Federal about them… its like Alex Jones said, ” If I put ‘ Federal Reserve’ before my name, like ‘Federal Reserve Alex Jones, does that make me Federal too?” (not verbatim) . Good points, good article….
I would be much interested in a law suit against the federal reserve. It is time we stop paying income taxes which go directly into paying the interest to the fed reserve of money borrowed by government. This is ridiculous when the government, as clearly stated in the Constitution, should print money not a private entity that charges interest. It simply does not make sense to have a private corporations/banks owning the fed reserve, government has no idea of who this group of elite people are as this information is confidential…just ridiculous!! The federal reserve is unconstitutional and should be abolished!