3. There is nothing “federal” about this “system”. The Associated Press reported: “The Treasury Department, for the first time in its history, said it would begin selling bonds for the Federal Reserve in an effort to help the central bank deal with its unprecedented borrowing needs.”2. The Fed periodically reports to Congress, but the Fed doesn’t ask; it tells. If the Fed can demand AIG’s stock in return for an $85 billion loan to the mega-insurer, we can demand the Fed’s stock in return for the trillion-or-so dollars we’ll be advancing to bail out the private banking system from its follies. to coin money, regulate the value thereof” (Article 1, Section 8, U.S. Constitution). These are banking institutions, trust funds, shareholders, and owners of each of the twelve regional Federal Reserve banks. A: There are actually 12 different Federal Reserve Banks around the country, and they are owned by big private banks. The initiative aims to help the Fed manage its balance sheet following its efforts to enhance its liquidity facilities over the previous few quarters.”. The answer is both. Yes, there is indeed a solution. Get 2 Months of Skillshare Pro (Free!) It is only logical that the public, not private, authority should manage people’s money and their savings, or economic surplus. Today’s arguments about restricting the power of the U.S. Federal Reserve are anything but new. By the same token as the Fed re-inflates one bubble after another, it also systematically redistributes wealth and income from the bottom up. The study reveals that, for the first time, middle-income households no longer constitute the majority of American house-holds: “Once in the clear majority, adults in middle-income households in 2015 were matched in number by those in lower- and upper-income households combined.” Specifically, while adults in middle-income households constituted 60.1 percent of total adult population in 1971, they now constitute only 49.9 percent. Federal Reserve Board announces termination of enforcement action Press Release - 11/24/2020 . GlobalResearch Center for Research on Globalization. By contrast, public-sector banks can better reassure depositors of the security of their savings, as well as help direct those savings toward socially-beneficial credit allocation and productive investment. Therefore, ending the recurring crises of financial markets requires placing the destabilizing financial intermediaries under public ownership and democratic control. Today, between 35 percent and 40 percent of all consumer spending is appropriated by the financial sector: bankers, insurance companies, non-bank lenders/financiers, bondholders, and the like [5]. Reuters reported on October 3: “The U.S. Federal Reserve gained a key tactical tool from the $700 billion financial rescue package signed into law on Friday that will help it channel funds into parched credit markets. In fact, 100% of its shareholders are private banks. The Fed announced on September 16 that it was giving an $85 billion loan to American International Group (AIG) for a nearly 80% stake in the mega-insurer. This is an extremely ominous trend because, aside from issues of social justice and economic insecurity for the masses of the people, the policy of creating and protecting asset bubbles on a regular basis is also unsustainable in the long run. It is not owned by anyone and is not a private, profit-making institution” [1]. As the late German Economist Rudolf Hilferding argued long time ago, the system of centralizing people’s savings and placing them at the disposal of profit-driven private banks is a perverse kind of socialism, that is, socialism in favor of the few: “In this sense a fully developed credit system is the antithesis of capitalism, and represents organization and control as opposed to anarchy. Who owns the Federal Reserve, who actually controls it, where does it get its money, and whose interests is it serving? The third board member is Lael Brainard. An updated members list is also included from the year 2015. The system is nominally controlled by member banks, i.e., all national banks plus some state banks, but real power rests with the board of governors in Washington. The Federal Reserve System is not "owned" by anyone. These include its name, its ownership, its purported independence form external influences, and its presumed commitment to market stability, economic growth and public interest.  Free Books! By continuing to use this site you agree to the use of cookies. . More importantly, it is also officially and explicitly stated on its Website: “The Federal Reserve System fulfills its public mission as an independent entity within government. . And herein lies ANOTHER MYTH that is created around the Fed: that it is an independent, purely technocratic or disinterested policy-making entity that is solely devoted to national interests, free of all external influences. copyright owner. Cnbc.com reports: The Board of Governors of the Federal Reserve is required to have seven members. But the banks don’t necessarily run the … The ownership of the 12 Central banks, a very well kept secret, has been revealed: Rothschild Bank of London Warburg Bank of Hamburg Rothschild Bank of Berlin Lehman Brothers of New York Lazard Brothers of Paris Kuhn Loeb Bank of New York Israel Moses Seif Banks of Italy ., the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered” (Thomas Jefferson, 3rd U.S. President). They can then turn around and put this money into 30-year Treasury bonds at 4.5%, earning an immediate 2.5% from the taxpayers, just by virtue of their position as favored banks. Another MAJOR MYTH associated with the Fed is its purported commitment to national and/or public interest. Who owns the Federal Reserve banks? In its latest power play, on October 3, 2008, the Fed acquired the ability to pay interest to its member banks on the reserves the banks maintain at the Fed. Yahoo Finance reported on September 17: “The Treasury is setting up a temporary financing program at the Fed’s request. There are twelve in total, one for each of the twelve Federal Reserve Districts that were created by the Federal Reserve Act of 1913. He is also a contributor to Hopeless: Barack Obama and the Politics of Illusion. Well, it’s a little confusing. Not so in the age of finance capital. According to the Fed’s website, the control Congress has over the Federal Reserve is limited to this: “[T]he Federal Reserve is subject to oversight by Congress, which periodically reviews its activities and can alter its responsibilities by statute.”. As the regulatory framework of the New Deal economic policies restricted the role of commercial banks to financial intermediation between savers and investors, finance capital moved in tandem with industrial capital, as it essentially greased the wheels of industry, or production. Letter from Chair Powell to Secretary Mnuchin regarding emergency lending facilities Recent Posting - 11/20/2020 . These increasingly controversial encroachments on the public purse warrant a closer look at the central banking scheme itself. [2] This statement of President Wilson is quoted in numerous places. Perhaps a most interesting and instructive example is the case of the Bank of North Dakota, which continues to be owned by the state for nearly a century—widely credited for the state’s budget surplus and its robust economy in the midst of the harrowing economic woes in many other states. Fact number one: the Federal Reserve System (hereinafter the Fed), although created by Congress, is answerable not to the public but to itself. . It could also lend money to the government and earn interest, or a fee—money that the government could create free of charge. The Centre of Research on Globalization grants permission to cross-post Global Research articles on community internet sites as long the source and copyright are acknowledged together with a hyperlink to the original Global Research article. Under those circumstances, where financial institutions served largely as conduits that aggregated and funneled national savings to productive investment, financial bubbles were rare, temporary and small. Now, it seems, the government is issuing bonds, not for its own use, but for the use of the Fed! Indeed, misrepresentation of its ownership is not merely by implication or impression created by its name. . If the Fed were actually a federal agency, the government could issue U.S. legal tender directly, avoiding an unnecessary interest-bearing debt to private middlemen who create the money out of thin air themselves. The Federal Reserve Banks are not a part of the federal government, but they exist because of an act of Congress. Our system of credit is concentrated. It took its marching orders from the White House and the Treasury—and it was the most successful decade in American economic history” [3]. Notre site en Français: mondialisation.ca, This article was first published by Global Research in October 2008, “Some people think that the Federal Reserve Banks are United States Government institutions. Nobody denies, however, that regardless of the exact words used, he had serious reservations about the formation of the Federal Reserve Bank, and the misguided policy of delegating the nation’s money supply and/or monetary policy to a cabal of private bankers. This is no speculation or conspiracy theory: redistributive effects of the Fed policies in favor of the financial oligarchy are backed by undeniable facts and figures. The member banks under Federal Reserve are actually private corporations and all the stocks of Federal Reserve are owned by member banks.Federal reserve notes are in theory backed by the assets of the Federal Reserve, but primarily by the power of Congress to lay taxes on people. Will the World Community Condemn the Murder of Iran’s Nuclear Scientist? It is intended to promote liquidity in the financing markets for Treasury and other collateral and thus to foster the functioning of financial markets more generally. “Live Without Dead Time:” Guy Debord’s Last Shot, The Center Cannot Hold: Biden and the Challenge for Progressives, The Rich are Cheering Wall Street’s Latest Records. It socializes other people’s money for use by the few” [4]. The choice of the word “Federal” in the name of the bank thus seems to be a deliberate misnomer—designed to create the impression that it is a public entity. Owning half of the largest economy’s debt may force the Federal Reserve to either declare bankruptcy or ask to be bought out. supervise and regulate banks. . The Federal Reserve Cartel: The Eight Families. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world. Federal Reserve Statistical Release H.8 puts the total “loans and leases in bank credit” as of September 24, 2008 at $7,049 billion. As we know from watching the business news, “oversight” basically means that Congress gets to see the results when it’s over. . Over the same period of time, the share of income going to upper-income households rose from 29 percent to 49 percent. The Centre for Research on Globalization will not be responsible for any inaccurate or incorrect statement in this article. . 2. If the Federal Reserve owns more than 15% of America’s debt, it can play it safe and exit at any time, but if they owned, let’s say 50%, their decision to keep this bad investment comes into play. Normally, the Fed swaps green pieces of paper called Federal Reserve Notes for pink pieces of paper called U.S. bonds (the federal government’s I.O.U.s), in order to provide Congress with the dollars it cannot raise through taxes. The program will auction Treasury bills to raise cash for the Fed’s use. Her websites are www.webofdebt.com  and www.ellenbrown.com . None of its stock is owned by the government. Why is the Treasury issuing U.S. government bonds (or debt) to fund the Fed, which is itself supposedly “the lender of last resort” created to fund the banks and the federal government? Agencies provide temporary relief to community banking organizations Press Release - … Americans of Modest Means are Draining 401(k)s. What Does Coexistence with Large Carnivores Actually Mean? “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”, “Give me control of a Nation’s money supply, and I care not who makes its laws.”. The Pew study unambiguously confirms this expropriation of national resource by the financial elites. Ismael Hossein-zadeh is Professor Emeritus of Economics (Drake University). I have included a full list from May 27, 1914, which would be the initial member’s composition when the Federal Reserve Act was passed on Christmas Eve 1913. The Federal Reserve is the cornerstone of the American economy. Among other benefits to the taxpayers. The solution is ultimately political.