There are several misapprehensions the public suffers from when it comes to the nature of the Federal Reserve System (the Fed).

The Fed's stated mission is to conduct monetary policy to manage inflation, maximize employment, and stabilize interest rates. The Fed supervises the nation's largest banks and provides services to the Treasury Department. It also provides stability to the country's financial system and can create money with a stroke on a computer keyboard. Although the seven members to the board of governors of the Fed are nominated by the president and confirmed by the Senate, the Fed's structure make it independent of direct government control. This makes the Fed the most powerful single actor in the U.S. economy and thus the world.

The Fed's finger is in every aspect of the economic pie. The Fed now even buys corporate bonds.  And with the global economic downturn due to the Chinese virus, the Fed has been shipping billions of U.S. dollars to central banks all over the world to keep their economies afloat. 

Given the awesome power the Fed has and that 'federal' is in its name, the average person naturally assumes that the Fed is part of the U.S. government, perhaps as a department under the U.S. Treasury. Not so. Although the Fed was established by Congress in 1913, it is in fact owned by its member banks. The Fed can be looked at as cartel of private banks that is chartered to look after the common economic good of the country. But does it?

Because of doubts about the Fed's actual intentions, critics like former congressman Ron Paul, who in his book End the Fed says that it is "immoral, unconstitutional, impractical, promotes bad economics, and undermines liberty." Ron Paul and others lay the blame for booms, bubbles, and busts at the feet of the Fed. 

The Federal Reserve Transparency Act, which was introduced in the Senate by Sen. Rand Paul, is an effort to lift the veil of secrecy under which the Fed is currently allowed to operate. It would do this by tighten the way audits on the Fed are done so that critical information is no longer omitted. The Fed resists this bill, and it languishes in the Senate. 

This is why the public's misapprehension on the Fed is important. If more people knew the Fed was not an actual part of the government but rather a central bank owned by private bankers, political pressure would build for passage of the Federal Reserve Transparency Act. Already it is reported that nearly three-quarters of Americans support a thorough audit of the Fed, as does President Trump. More pressure is needed on the Fed. Perhaps the next economic/financial crisis will bring it about. And ask yourself, what is wrong with transparency and why does the Fed resist it? 

Secrecy is in the Fed's DNA. It was created secretly in the dead of the night in 1910 on Jekyll Island, Georgia, by private bankers where they established the blueprint for the Fed. That was then presented to Congress to ratify and was signed into law in 1913 by President Woodrow Wilson. For the full story of the creation of the Fed and an explanation of its true mission, see G. Edward Griffin's book The Creature from Jekyll Island.  Griffin claims the Fed was created by the bankers, for the bankers, and is run by the bankers. History bear this accusation out. 

If you read either The Creature from Jekyll Island or Ban the Fed, you will see why the rich get richer and the middle class gets poorer, and the why at the very least the Fed needs to be audited, if not dissolved. But don't expect righteousness or what the Constitution says to win the day here. The powerful elite will burn the economy down before giving up their piggy bank.  

Image: US Gov.