Federal Reserve

by Stephan Smith on November 20, 2010

The Federal Reserve. Its kind of scary to think of it because of the power they have. Not only do they influence have absolute control over the United States, they also have major influence over the entire world. But you may say, how do they have absolute control over the United States and major influence over the entire world? Muahahaha. Just keep reading my little one, just keep reading.

What in the World is the Federal Reserve?

The Federal Reserve are the big boys in town. As a matter of fact, they are the only boys in town. The Federal Reserve, also known as the FED or the Federal Reserve System, is the central bank of the United States of America. The authorities of the Federal Reserve System are comprised of the Board of Governors, the Federal Open Market Committee and the Federal Reserve bank presidents. Yes, there are multiple Federal Reserve bank presidents because the FED has 13 locations throughout the United States.

Branch Locations of the Federal Reserve

    Boston, Massachusetts
    New York, New York
    Philadelphia, Pennsylvania
    Cleveland, Ohio
    Richmond, Virginia
    Atlanta, Georgia
    Chicago, Illinois
    St. Louis, Louisiana
    Minneapolis, Minnesota
    Kansas City, Kansas
    Dallas, Texas
    San Francisco, California
    Headquarters – Washington D.C.

Here is the location of the Federal Reserve System headquarters.

The Federal Reserve is the most powerful central bank in the world. Why? Because the FED is the central bank of the world’s largest economy. It has power in the most influential economy in the world. The Federal Reserve is also one of the central banks that has more than one responsibility. Known as the FED’s dual mandate, the FED is responsible for ensuring price stability in the United States and implementing monetary policies that promotes maximum employment.

Federal Reserve Building

Federal Reserve Building

The Federal Reserve Act

Now what the heck is the ‘Federal Reserve Act’? That’s what you’re probably wondering, huh? The Federal Reserve Act is the short title of a statue, which is a legislative act, passed by the U.S. Congress and signed into law by President Woodrow Wilson that gave the Federal Reserve System power to issue currency for the United States. The Federal Reserve Act was passed on December 23, 1913, which gave birth the the Federal Reserve. Here is where the United States government relinquished the power to created their nation’s money to an independent central bank. Idiots.

Federal Reserve Building

Another Shot of the Federal Reserve Building

Claims of the Federal Reserve

If you have read my article about central banks, you will know that I state that all central banks are independent of government. The Federal Reserve states the opposite by saying…

The Federal Reserve System is not “owned” by anyone and is not a private, profit-making institution. Instead, it is an independent entity within the government, having both public purposes and private aspects.

As the nation’s central bank, the Federal Reserve derives its authority from the U.S. Congress. It is considered an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government, it does not receive funding appropriated by Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms.

– Federal Reserve System

Let’s look at this quote very carefully. The Federal Reserve states that it “…is not owned by anyone…” and “…that it is an entity within government having public purposes and private aspects.”.

Point one: If the Federal Reserve is an entity within the government that means it does have an owner; the People of the United States would be the owner of the Federal Reserve. President Abraham Lincoln said it perfectly, “…that government [is] of the people, by the people, for the people…”. The fact that the Fed states it isn’t owned by anyone makes it not of government.

Oh, I’m not done. The FED also states “It [The FED] is considered an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government…”. If the government cannot govern your actions, that puts you above the government. When normal procedures and laws don’t apply to you and you can take whatever action you want without governance, you are above or of a higher authority than those procedures and laws. How can one say, I am within government, but the government can’t govern me? The FED is not within the government. It is independent of government. Above government.

Point two: The FED also states “…it [FED] is not a private, profiting making institution…” and also states (this quote isn’t written above. I found this elsewhere on the FED’s website)…

“The Federal Reserve’s income is derived primarily from the interest on U.S. government securities that it has acquired through open market operations. Other sources of income are the interest on foreign currency investments held by the System…”

– Federal Reserve System

Government securities are investments to investors looking to make a profit. The FED buys government securities and makes back the money it spent plus interest. That interest is profit or a return on investment (ROI). The FED makes profit. How can the FED say they are not a profit making institution when they are a profit making institution? I am also aware that the Federal Reserve states…

“After paying its expenses, the Federal Reserve turns the rest of its earnings over to the U.S. Treasury.”

-Federal Reserve System

My response to that would be: there would need to be various independent audit organizations that do random, unannounced checks on all facets of the Federal Reserve, including all its branches. Unfortunately, that won’t happen. How do I know. Haha. Because the Federal Reserve states…

“Operations at each Federal Reserve Bank also are subject to review by the Government Accountability Office (GAO), the audit arm of the U.S. Congress. However, GAO auditors are restricted by law from reviewing monetary policy operations and transactions carried out by the Federal Reserve on behalf of foreign central banks. This restriction was imposed by Congress to assure the independence of the Federal Reserve from political influence.”

-Federal Reserve System

Un-freaking-believable. If auditors can not audit all facets to ensure that all earnings are accounted for, then the FED is a profiting, I repeat, a profiting institution.

The FED also states that it is not private, yet it also states “…[The FED] having both public purposes and private aspects.” You are not private but have private aspects? Huh? I’ve already established that the FED is above government and it goes on to say that it has private aspects. If the People of the United States don’t own you and you have private components, then someone does. Private is opposite of public. Someone, whether it be an individual, a group of individuals or and entity / entities of some sort owns the FED.

So far, the FED is a private profiting entity, as by their own confession. What they do with their profit is another discussion.

The Federal Reserve Logo

The Official Federal Reserve Logo

The Exception

The People of the Unites States can have no say of what the Federal Reserve does. If the FED really wants to take an action, the People cannot stop them. Hence, they are independent of the government; the FED is not of the government but above. But there is one exception that I mustn’t omit.

The People of the United States, through the President, can appoint the members on the Board of Governors including the Chairman of the FED. But before you say “AH HA, they are apart of the government because the President can pick who sits on the board”, I submit to you this statement.

Just because the government has a say on one aspect the Federal Reserve’s dealings, does not negate the fact that the Federal Reserve is a private entity. The government has a say on many aspects of many private businesses’ dealings. That does not make those businesses any less private. Though the President can choose who sits on the Board of Governors and the U.S. Congress can question the actions of the Federal Reserve, either the President nor the U.S. Congress can stop any action the Federal Reserve wants to perform.

The government can stop the actions of any other private business if the actions violates the law or puts others at disadvantage and does overall harm to society. However, a central bank like the Federal Reserve cannot be stopped, even it breaks the law (prejury, among other things), puts others at disadvantage and does overall harm to a society (Making currency debt, inflation).



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{ 1 comment… read it below or add one }

kalgahara November 30, 2012 at 6:02 PM

i agree, the fed is too pwerful, and i think it should be regulated so that it doesnt allow people and specificaly banks to go go ahead and destabilise markets, central bank should also maintain the good balance between unemployment and inflation wisely and carefuky

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