The United States Federal Reserve System
In 1934 Congressman Louis T. McFadden described the United States Federal Reserve System as a corrupt and evil institution controlled by wealthy vultures that had cheated the U.S. out of enough money to pay the national debt several times over, had impoverished and ruined its citizens, and (16) practically bankrupted the country. Today, many continue to view the U.S. Central Bank with a great deal of contempt.
The Federal Reserve, also known as the Fed, was created by Congress on December 23, 1913. Born out of the 1907 depression, (17) it was established to implement currency reforms. Designed to prevent financial panics and provide emergency reserves for the economy. Over time, its role grew to include other responsibilities, such as setting interest rates and regulating the amount of money in circulation, which itself influences interest rates and also affects how quickly the economy grows.
In general, the Fed is tasked with helping maintain a vibrant economy while fostering the economic well-being of the nation, accomplishing this through monetary policies that aim to stabilize prices by keeping annual inflation at no more than 3%, and maintain low unemployment. (18) Again, the goal is to make the nation’s monetary and financial systems safer, more flexible and more stability.
Given its influence over both the country’s and world’s economies, many believe the United States Federal Reserve is among the most powerful entities in the world—some would say too powerful. It is headed by a chairman, and is composed of a Board of Governors and twelve Regional Federal Reserve Banks. It has been criticized for operating in too much secrecy and without any real accountability; despite the fact its actions significantly impact every citizen in the nation.
A more cynical view is that the Fed is a privately owned collection of institutions, centrally controlled and managed by a (19) crew of banking oligarchs, designed to drain money from the American people via the U.S. government and transfer those funds to the ultra-wealthy thanks to an ever-expanding debt spiral. For example, (20) the federal debt is over five times what it was just 20 years ago.
Among its other criticisms are that the Fed creates money out of thin air, devalues U.S. currency, is dominated by Wall Street and New York banks, and benefits special interests. It is also criticized for disproportionately hurting the poor and middle class, for not being a part of the U.S. government, and for being unconstitutional.