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Boycott the Banking Cartel, Join a Credit Union

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It is no secret that this author detests the Federal Reserve Bank and believes it should be abolished in favor of a sound monetary system. However, the chances of that happening any time soon are about as good as former president Bush being appointed Secretary of State in a future administration. So, is there anything Americans can do to hurt the cartelized system and potentially bring it to its knees? Besides electing anti-Fed representatives and senators to Congress, Americans have the ability to take their banking business elsewhere – to non-Federal Reserve credit unions.

For first time readers of this column, I will briefly review the reasons for my disdain of the Fed. In 1913, at the urging of big bankers, Congress created the Federal Reserve System. The system essentially set up a banking cartel in the United States whereby through Fed policies big banks could reap huge profits while the little guy had his purchasing power and savings stolen from him. This was done through interest rate adjustments, a fractional reserve banking scheme and the printing press. Since 1913 Fed policies have been responsible for a 95 percent loss in the purchasing power of the dollar. Of course the Fed had accomplices in committing this grand larceny of epic proportions. On April 5, 1933 Roosevelt ended the Gold Standard for domestic holders and in 1971Nixon permanently closed the Gold window for foreigners. Because the supply of money was no longer restricted to the amount of gold in circulation, the Fed could now increase the money supply arbitrarily. And that is exactly what it did

As a related consequence, today, our national debt is $11 trillion and according to President Obama Americans need to get used to budget deficits over $1 trillion a year into the future. Many will say, “Well, the national debt doesn’t matter”. Many pundits and politicians alike seem unfazed by all the spending. But, the debt does matter. Like individuals and businesses, when Uncle Sam’s credit runs out and the bills come due Washington will be faced with a choice between default or raising taxes and cutting spending. In light of the current spending spree and Washington’s aversion to spending cuts, tax hikes will be hefty and will certainly lead to economic disaster.

Then there are all the bailouts of Fed member banks. These banks, and most Americans know who they are, have made horrible lending decisions in the recent past, but through their buddies at the Fed they are not suffering the consequences of those decisions. Bernanke pressured the Congress to appropriate money we didn’t have to the tune of $850 trillion to bail the banks out. Congress, going against the wishes of 90 percent of the American people, acquiesced. The Fed printed the money. What did we get for our involuntary generosity? No progress toward solving our economic woes and no accountability from the Fed on where the money went.

So, let’s get back to our discussion of credit unions. Because of their status they have many advantages for consumers. They are not-for-profit and therefore unconcerned about stockholder equity and exempted from most state and federal taxes. Consequently, credit unions, compared to traditional banks, return their profits to their customers, who are the owners, in the form of lower rate loans and services and higher rate savings accounts.

But, beyond the advantages of using credit unions as a consumer, using them would contribute to hurting the Fed sponsored cartelized banking system and perhaps perpetuate its eventual downfall. First, credit unions are not regulated by the Fed. Second, Fed banks rely on our deposits to make loans. By rechanneling our deposits into safer, more responsible credit unions we take away their ability to make profit (and bad loans). The question then arises, how much further bailout money would the American people tolerate for these failing Fed banks before calling for the Federal Reserve system’s abolition?

Third, with less deposits in Fed banks the fractional reserve scheme is tempered in its ability to artificially increase the money supply. It is true that credit unions are held to reserve requirements, but to the best of my knowledge these are minimum requirements. Thus the democratically elected boards of credit unions could keep their reserves at percentages much higher than required by the Fed.

Credit unions, like the rest of us, are feeling the effects of the financial crisis. However, they are not running to Congress looking for handouts from taxpayers. They exist to serve their members and not irresponsible Wall Street fat cats. Many did not participate in sub-prime lending. By transferring the national savings to them and away from Federal Reserve banks, Americans can put a significant hurt on the Federal Reserve system and eventually bring about its demise. For more information about joining a credit union, see the National Credit Union Association.

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About Kenn Jacobine

  • I have been a member of several credit unions over the past few years (several because job changes and moves have required me to transfer funds to new accounts in new cities), and I have almost always been treated better by them than when I had accounts with traditional banks. Currently, I have both a car loan and a personal loan through my credit union, and both are at reasonable interest rates for someone with my credit history. My credit union is helping me become responsible with my money, which is more than I can say for most banks I have encountered.

  • Bliffle

    Credit Unions are an excellent suggestion!

    I’ve been a member of at least one CU for over 40 years. They are, simply put, the best place for your everyday accounts: checking, savings, car loan, personal loans.

    Nearly anyone can join a CU, your employer doesn’t have to be associated with a CU. Nearly everyone belongs to some kind of “affinity group” that qualifies them.

    join today!

  • STM

    I’m a credit union member too and have been for 30 years. At first, it was the credit union for the media, but it’s kind of spilled out in recent years through amalgamations into a big credit union.

    No bank fees, including for ATMs, way better interest rates on loans, including mortgages … and a customer service team actually based here in Sydney, Australia, not India, Malaysia or the Philippines – and who speak the Queen’s English and pick up the phone first time every time without making you go through the hoops.

    And they’re still offering us unsecured money at decent rates even with the global credit crunch.

    What’s not to like?

  • bliffle

    Also, deposits are insured by a federal agency just like the FDIC. And CU rules prevent the kind of dangerous hookups that are sinking banks now.

    Some CUs have the interesting by-law that they CANNOT show a profit in any year. Any excess must be returned to the members, usually by a retroactive adjustment of interest rates.

  • Sounds like a community bank!

  • Fresh Meat

    Have to agree on Australian Credit Unions. Have been a member of the Defence Credit union for 18 years and have never paid a banking fee. One of the reasons that I often hear from people on why they do not join is no access to points schemes for Credit purchases.

    If you really think those represent value for your money… then good luck to you 🙂

  • jamminsue

    Fresh Meat:

    You said “One of the reasons that I often hear from people on why they do not join is no access to points schemes for Credit purchases.”

    You are exactly right when it comes to many Americans. To my eternal embarrassment. However, it was another American that said “A fool is born every minute.”

    Free lunch, anyone? Only $25 for the ticket.

  • Kathy

    I agree. We just pulled our money out of the bank and moved to a credit union. I am disgusted with banks, and I even work for one!

  • Credit card points schemes are great… if you pay off your balance every month, as we do, and treat the card as if it were a checking account. Our actual checking account is with the same bank, so we simply transfer the balance over.

    We’re also credit union members, and it’s true that they can usually give you much better deals than banks for most financial services. In our case, however, my father-in-law is a Vietnam veteran, so we qualify for membership of USAA, whose rates beat even the credit unions’.

  • Ruvy


    An excellent article, and an excellent suggestion. But be careful of falling behind in payments with a CU. They will chase you down like bloodhounds in order to keep their bad debt ratios down.

  • Ken,

    Bill Mahersuggested this idea of moving all the money to smaller banks, a few weeks ago, in the Huffington Post and at first I thought, “Is he nuts?”

    After reading your article this morning, I am thinking that this is a very good idea.

    My question for you is this,

    “Would the Stock Exchange crash?”

    Because, as disgusted as I am right now by the excessive greed displayed by these fools, I do not want it all to go down in flames; taking us with it!

    P.S. I noticed in your bio that you are an Educator, I like that. 🙂

  • sean

    I’ll switch my Wells fargo to a credit union asap