In late December 1913, the government of the United States voted the Federal Reserve Act into law.
The promoters had a political problem: widespread resistance to the idea of a central bank. So, the designers of the Federal Reserve System — mainly Kuhn, Loeb economist Paul Warburg, a recent German immigrant — created an illusion: a decentralized system of regional Federal Reserve banks. These were private. They were supposedly independent. They were impotent — except for the Federal Reserve Bank of New York, where the real influence of the entire Federal Reserve System has always been.
If you want to understand this system, begin with Murray Rothbard’s book, The Mystery of Banking. I have described it here: http://mises.org/daily/5499. Then follow with Griffin’s book, The Creature from Jekyll Island. He summarizes it in a video lecture here: http://www.garynorth.com/public/11738.cfm. Both men present the FED as the premier enforcement arm of a bankers’ cartel. No economics textbook ever does. The chapter on the FED never follows the chapter on cartels. The connection would be too obvious.
RICHARD FISHER ON RENT-SEEKING
Richard Fisher is the president of the Federal Reserve Bank of Dallas. He has been a vocal critic of Ron Paul.
In a recent speech in Australia, he distinguished between the board of governors of the Federal Reserve system, which is an agency of the United States government, and the 12 regional Federal Reserve banks, which are not agencies of the federal government, but which technically are also not profit-seeking institutions.
If you go to the website of the Federal Reserve System, you see that its URL ends in .gov. If you go to the websites of the regional Federal Reserve banks, you find that their URLs end in .org. They do not end in .com.
The regional banks of the Federal Reserve are not listed on any stock market exchange. They are privately owned. They are owned by commercial banks in their districts. We are never told how many shares are owned by which banks. These matters are not considered relevant to general public. The general public has no say in this matter. They are strictly private organizations. Therefore, the federal government has no say over which banks own the shares, nor does it have any say over the election of officers, including the president of each of the regional banks.
In other words, the system is a classic old boy network. This network is said to control, or at least influence, regional banking matters. We are never told exactly how much authority the regional banks possess. Official literature issued by the regional banks and by the Federal Reserve System is silent on this matter. That is to say, how much autonomy do they have? Far more important, how much autonomy does the Federal Reserve Bank of New York have? This is never discussed in public by any member of the Federal Reserve System or a regional Federal Reserve Bank. It is a verboten topic. It is not discussed in textbooks on money and banking. It is not discussed in textbooks on American history or textbooks on economics. An amazing silence covers the entire subject.
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