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July 30, 2012

Is Federal Reserves a private entity?


Federal Reserves
The Federal Reserve Act on December 23, 1913. The Federal Reserve System (Federal Reserve System) is not a federal entity (within the meaning of Government). Its status is complex: it is a system composed of 12 private regional banks, the Federal Reserve Banks, and a board of Governors in Washington purportedly under the supervision of the federal state. 
            Each of these regional banks belongs to private banks that are shareholders and appoint their chairman. There is however a special status to shareholders: Shares may be sold, traded or placed as collateral and does not alter the statutes. A portion of U.S. banks are members of the system: all banks with a national certification (federal) and part of those holding the license of a state (e.g. Texas). Obtaining details of the shareholding of regional banks seems rather difficult to obtain. It seems that some of them may have a very large share of capital. Dividends are distributed annually to shareholders of private banks to regional Federal Reserve 6% of their shares with the excess profits being returned to the Treasury. 

            The system is headed in Washington by a board of seven governors appointed for 14 years (renewable) by the President of the United States and confirmed by the Senate. Among them, the Chairman of the Board of Governors ("Fed Chairman") may be renewed every four years. Monetary policy is conducted by the FOMC (Federal Open Market Committee), consisting of seven governors and five presidents of Federal Reserve Banks. Before a reform in the 1930s, the operations of "open market (purchases and sales of securities held by the Fed, mainly Treasury securities) were controlled by the Fed Governor of New York. Since they are controlled by the FOMC. 
           The Federal Reserve Banks, the Board of Governors and its President are not accountable to Congress. However, it is required to be regularly interviewed by the appropriate committees of Congress; the Fed is obliged to disclose its balance sheet. However, the Fed does not disclose to Congress information about its transactions and the development of decision making, including monetary policy, such as fixing interest rates. 
          Of course, the U.S. government borrows with interest. The irony is that it is the Treasury Department, Bureau of Engraving and Printing United States, which prints and sells tickets to the Fed in paper prices. This paper has become money and is borrowed by the banks that are funded from the Fed. The Federal Reserve Banks and primary dealers can buy treasury securities (T-Bills, T-Notes, T-Bonds) with this money. Clearly, the state sells the paper to the Fed and is financed by borrowing it at face value with interest. The primary dealers can then sell or exchange its shares in the world. 
      
             The Federal Reserve System is actually a cartel, that is to say this is an association of private banks, in partnership with the state, sharing the monopoly of issuing money and setting credit rates. These banks are paid a dividend every year on the profits of the Fed. The system does not give total control - direct and formal - to private banks shareholders for monetary policy. The primary interest for American bankers to establish the system of central banks is that they did not have before that, a system for ensuring and perpetuating the creation of money through the fractional reserve system. Secondly, they have a powerful lever, through their influence on the actual Fed policy, to artificially set interest rates (what they call the elasticity), enabling them to create conditions for a bubble or its collapse. 

       As long as the substance over form is concerned, the Federal Reserve System enjoys specifically comfortable partnerships with government and big banks, the banking cartel set up by the government, as top bankers had long planned. Many critics of the Fed like to trumpet the fact that private bankers have a legal Federal Reserve System, but the fact is unimportantly legalistic. The benefits of the Fed bankers lie in the essence of its operations: its task of coordinating and supporting the inflation of bank credit. These benefits dwarf any profits possible direct banking operations of the Fed, and relegated to insignificance.(Wells, 2004)

      Murray Rothbard, an economist, in "The Case Against the Fed" (1994) notes that the Fed has dominated since its creation the banking industry majors such as JP Morgan, Chase Manhattan Bank (merged into JP Morgan Chase) and more recently Goldman Sachs. Some congressmen, senators and economists deplore and condemn such enormous domination of Fed since its inception. In American history, there have been three attempts to centralize bank prior to the Fed.

              The Federal Reserve System is responsible to person and has no budget and it is subject to no audit, and no commission Congress knows, or can truly supervise its operations. The Federal Reserve, is in almost total control of vital national monetary system,  without being accountable to no one and this strange situation, if known, is invariably trumpeted as a virtue unfortunately.

          Of course, the U.S. government borrows with interest. The irony is that it is the Treasury Department, Bureau of Engraving and Printing United States, which prints and sells tickets to the Fed in paper prices. This paper has become money and is borrowed by the banks that are funded from the Fed. The Federal Reserve Banks and primary dealers can buy treasury securities (T-Bills, T-Notes, T-Bonds) with this money. Clearly, the state sells the paper to the Fed and is financed by borrowing it at face value with interest. The primary dealers can then sell or exchange its shares in the world. 
      
             The Federal Reserve System is actually a cartel, that is to say this is an association of private banks, in partnership with the state, sharing the monopoly of issuing money and setting credit rates. These banks are paid a dividend every year on the profits of the Fed. The system does not give total control - direct and formal - to private banks shareholders for monetary policy. The primary interest for American bankers to establish the system of central banks is that they did not have before that, a system for ensuring and perpetuating the creation of money through the fractional reserve system. Secondly, they have a powerful lever, through their influence on the actual Fed policy, to artificially set interest rates (what they call the elasticity), enabling them to create conditions for a bubble or its collapse. 
       As long as the substance over form is concerned, the Federal Reserve System enjoys specifically comfortable partnerships with government and big banks, the banking cartel set up by the government, as top bankers had long planned. Many critics of the Fed like to trumpet the fact that private bankers have a legal Federal Reserve System, but the fact is unimportantly legalistic. The benefits of the Fed bankers lie in the essence of its operations: its task of coordinating and supporting the inflation of bank credit. These benefits dwarf any profits possible direct banking operations of the Fed, and relegated to insignificance.(Wells, 2004)

      Murray Rothbard, an economist, in "The Case Against the Fed" (1994) notes that the Fed has dominated since its creation the banking industry majors such as JP Morgan, Chase Manhattan Bank (merged into JP Morgan Chase) and more recently Goldman Sachs. Some congressmen, senators and economists deplore and condemn such enormous domination of Fed since its inception. In American history, there have been three attempts to centralize bank prior to the Fed.

              The Federal Reserve System is responsible to person and has no budget and it is subject to no audit, and no commission Congress knows, or can truly supervise its operations. The Federal Reserve, is in almost total control of vital national monetary system,  without being accountable to no one and this strange situation, if known, is invariably trumpeted as a virtue unfortunately.

       As long as the substance over form is concerned, the Federal Reserve System enjoys specifically comfortable partnerships with government and big banks, the banking cartel set up by the government, as top bankers had long planned. Many critics of the Fed like to trumpet the fact that private bankers have a legal Federal Reserve System, but the fact is unimportantly legalistic. The benefits of the Fed bankers lie in the essence of its operations: its task of coordinating and supporting the inflation of bank credit. These benefits dwarf any profits possible direct banking operations of the Fed, and relegated to insignificance.(Wells, 2004)
      Murray Rothbard, an economist, in "The Case Against the Fed" (1994) notes that the Fed has dominated since its creation the banking industry majors such as JP Morgan, Chase Manhattan Bank (merged into JP Morgan Chase) and more recently Goldman Sachs. Some congressmen, senators and economists deplore and condemn such enormous domination of Fed since its inception. In American history, there have been three attempts to centralize bank prior to the Fed.

              The Federal Reserve System is responsible to person and has no budget and it is subject to no audit, and no commission Congress knows, or can truly supervise its operations. The Federal Reserve, is in almost total control of vital national monetary system,  without being accountable to no one and this strange situation, if known, is invariably trumpeted as a virtue unfortunately.

      Murray Rothbard, an economist, in "The Case Against the Fed" (1994) notes that the Fed has dominated since its creation the banking industry majors such as JP Morgan, Chase Manhattan Bank (merged into JP Morgan Chase) and more recently Goldman Sachs. Some congressmen, senators and economists deplore and condemn such enormous domination of Fed since its inception. In American history, there have been three attempts to centralize bank prior to the Fed.
              The Federal Reserve System is responsible to person and has no budget and it is subject to no audit, and no commission Congress knows, or can truly supervise its operations. The Federal Reserve, is in almost total control of vital national monetary system,  without being accountable to no one and this strange situation, if known, is invariably trumpeted as a virtue unfortunately.

              The Federal Reserve System is responsible to person and has no budget and it is subject to no audit, and no commission Congress knows, or can truly supervise its operations. The Federal Reserve, is in almost total control of vital national monetary system,  without being accountable to no one and this strange situation, if known, is invariably trumpeted as a virtue unfortunately.


                   Note that the title of Governor of regional banks has been replaced by the more "democratic" President and the Board's power in Washington has been strengthened at the expense of regional banks. 
The Federal Reserve System provides complete control of monetary policy to a group of unelected men whose term lasts 14 years (governors) and this is in contradiction with the Constitution which states that Congress is responsible for issuing and regulating money.
        The Fed’s website claims that it is not a private organization therefore does not operate for profit but that is a flat lie. The Federal Reserve was established in 1913 as a "lender of last resort" to fence off bank runs, in the wake of a bad bank panic in 1907. The Fed’s mandate was then and still continues to keep the private banking system intact and more significantly keeping the monopoly on creating the national money supply. Only other than the coins, every circulated dollar is created privately as a debt to the Federal Reserves or the banking system.










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