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. (Henry Ford)
Give me control of a Nation’s money supply, and I care not who makes its laws. (M. A. Rothschild)
The Federal Reserve Bank (or simply the Fed), is shrouded in a number of myths and mysteries. These include its name, its ownership, its purported independence form external influences, and its presumed commitment to market stability, economic growth and public interest.
The first MAJOR MYTH, accepted by most people in and outside of the United States, is that the Fed is owned by the Federal government, as implied by its name: the Federal Reserve Bank. In reality, however, it is a private institution whose shareholders are commercial banks; it is the “bankers’ bank.” Like other corporations, it is guided by and committed to the interests of its shareholders—pro forma supervision of the Congress notwithstanding.
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. Indeed, misrepresentation of its ownership is not merely by implication or impression created by its name. 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. It is not owned by anyone and is not a private, profit-making institution” .
To unmask this blatant misrepresentation, the late Congressman Louis McFadden, Chairman of the House Banking and Currency Committee in the 1930s, described the Fed in the following words:
Some people think that the Federal Reserve Banks are United States Government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders.
The fact that the Fed is committed, first and foremost, to the interests of its shareholders, the commercial banks, explains why its monetary policies are increasingly catered to the benefits of the banking industry and, more generally, the financial oligarchy. Extensive deregulations that led to the 2008 financial crisis, the scandalous bank bailouts in response to the crisis, the continued showering of the “too-big-to-fail” financial institutions with interest-free money, the failure to impose effective restraints on these institutions after the crisis, the brutal neoliberal cuts in social safety net programs in order to pay for the gambling losses of high finance, and other similarly cruel austerity policies—can all be traced to the political and economic power of the financial oligarchy, exerted largely through monetary policies of the Fed.
It also explains why many of the earlier U.S. policymakers resisted entrusting the profit-driven private banks with the critical task of money supply and credit creation:
The [private] Central Bank is an institution of the most deadly hostility existing against the principles and form of our constitution . . . . If the American people allow private banks to control the issuance of their currency . . ., 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). …