Who Really Owns the Federal Reserve?
And whose interests are served?
Federal Reserve Board is a Sovereign Government
Today I want to draw your attention to the following passage from the Federal Reserve website below, which says, "the Federal Reserve can be more accurately described as 'independent within government' rather than 'independent of government.'"
Here, they are talking about the central bank board of governors located in Washington DC. They are not talking about the twelve regional Federal Reserve Banks because, as the Fed admits above, those institutions are closely-held, privately-owned corporations. Notice the Fed does not say its regional banks are “non-profit.” The Fed says the regional banks are “not operated for profit.” That’s different. And what they mean is that, any profits associated with those twelve corporations accrue directly to the shareholders. The shareholders are the Fed “member” banks in each region of the country. And because a corporation possesses a fiduciary responsibility to its shareholders, the Federal Reserve Regional Banks exist for one reason, to maximize the profitability of their shareholders, the private banks of the Federal Reserve System.
And here’s the point. Because the Fed is “independent,” and because it is “not owned by anyone,” the Federal Reserve Central Bank governing board is SOVEREIGN! It is a sovereign government, in many ways more sovereign, more independent than the US Government. In 1913 the Congress of the United States created a sovereign governing body, one that operates in the shadows of secrecy, WITHIN the US Government, but, importantly, is insulated from the US Government and is thus not part OF the US Government. The Congress delegated its Constitutional authority to create money TO THAT SECRET, SOVEREIGN, INSULATED GOVERNMENT.
So what we have here is a particular variety of public-private partnership. Like many PPP's, the public pays the investment costs and the private receives the benefits. And this PPP is particularly egregious because the operating arms of the system solely promote the profitability of each respective member bank. Nowhere in the system is there a link to any necessary responsibilities to promote the welfare of the American people, only the member banks.
Congress has issued two 'mandates' to the central bank board, which, frankly, the board largely abandoned as soon as those mandates were issued. Those mandates are to (1) to maximize employment and (2) to stabilize the value of the currency. Providing a detailed historical analysis of the board's abandonment of those supposed mandates is beyond the scope of this post. But recall the Great Depression. The cause was a lack of liquidity in the economy after the self-imposed stock market crash. Federal Reserve refused to loan new dollars into the economy until President Roosevelt confiscated the nation’s privately-held gold and placed it as collateral for the US Government to borrow enough new PRIVATELY-OWNED dollars, created out of thin air by Wall Street banks, to put Americans back to work in his New Deal public works programs. If the Federal Reserve were part of the US Government, the US Government would not have to put up collateral to issue currency. The US Government would own the currency as equity. That the US Government must put up collateral to create Federal Reserve currency is tantamount proof that the Fed is not part of the US Government, but is instead its own sovereign government.
Regarding mandate #2, the US dollar is worth a tiny fraction of what it was when the system went online, so there you go.
Representatives of Federal Reserve Banks are Policy-Makers on the Open Market Committee,
And because this particular private industry possesses the franchise to create public currency, made that way by law, what we have is a built-in conflict of interest "WITHIN" its governing boards, and thus “WITHIN” the US Government. The government exists for the welfare of the people. The regional Fed banks, five presidents of which set policy on the Federal Reserve Open Market Committee, exist for the welfare of their respective member banks. Thus, the Fed OMC cannot adhere to its mandate because doing so would violate its lawful fiduciary responsibilities to the shareholders of the regional Fed banks it supervises.
One cannot serve two masters. While the people languish, Wall Street flourishes. When the banks fail, the people bail them out. And because the member banks legally create money out of the air, nothing prevents them and their corporate cousins from creating dollars to affect legislation in Congress, legislation such as McCain-Feingold, which created the PAC system to fund political campaigns of corporate America's favorite candidates. And you wonder why your favorite candidates are always starved for funds. Wonder no more.
It is an illusion that the American people are the ones truly represented in congress. To gain election and stay there, the system forces members of congress to represent the interests of king-maker corporatists instead. Those power brokers have but a phone call to make for a bank to conjure enough brand new dollars to either keep them in office, or to back a viable competitor to unseat them. PAC's are legalized money-laundering operations. The PAC system is destroying America, making the people its slaves by transferring the fruits of their labor to the private, financial institutions that control the issuance of American currency. In essence, America has been made a colony of the world financial system. This is how they did it.
In 1913, Congress created a sovereign government, placed it ‘within’ the US Government, and put it at the head of the table of the Fed policy-making committee, five of twelve members of which charged with the ultimately responsibility of transferring as much American wealth as possible to the issuers of American currency. That the remaining seven members of the OMC can control the vote is inconsequential. That is because those seven Federal Reserve Board members have their own conflicts, which we will look at in a future Substack.
So do not expect your representatives to fix this system. They are slaves just like the rest of us. To become elected, by and large, members of congress must prostitute themselves. Their major contributors place them on a long leash, enabling them to say things you might want to hear during a campaign. But when that phone rings, as a rule your representative will answer it and do as he or she is told.