Who are the shareholders of "The Fed" Federal Reserve Bank and why is it a private monopoly?

Answer 1

There are two levels of control here...

Control of the Federal Reserve System is by the Board of Governors. The Board of Governors is a government agency whose members are appointed by the president and confirmed by congress. There is no mechanism or structure for private ownership at this level. (If someone disagrees, please explain how someone could theoretically take legal title of the board of governors.)

At the Federal Reserve branches, there is a semblance of private ownership.By law, every member bank has to purchase shares and they can elect 6 of the 9 board members to their local branch. The number of shares is intended to be relative to the bank size so larger banks have more 'ownership'. No individual can own shares in a Federal Reserve branch and these shares cannot be sold on the open market.

The branches are responsible for day-to-day operations and to carry out policy and directives from the Board of Governors. Monetary policy, including the expansion/contraction of money, interest rates, etc is determined by the Board of Governors.

Many Fed conspiracists will claim foreign ownership of the Fed. However there are no foreign banks members. A paper that investigated these claims can be found at http://www.usagold.com/FederalReserve.html.

The origins for it's independence and private bank influence can be traced to its charter. Prior to the 1913, all banking was private with national banks having significant control over the nations money supply. The general consensus was there needed to be a central bank that oversaw the nations banking business. There was considerable debate whether it should be private or government controlled. Eventually it was a compromise where a a central board would be governmental, and the branches would be independent and dominated by their local members.

In the 1920's however, the branches began flaunting their independence. They would often ignore the central board of governors and often act independently. This created a situation where there could be a difference monetary policy for every branch. In addition, the branches were surprisely indifferent to continued bank failures; after all, it was just less competition to the larger banks in control of the branches.

A key event that was the genesis for later change was when the central board advised the NY Branch from facilitating easy money and indirectly supporting stock speculation. The NY Branch declared that the board did not have the right to interfere. The market crash supported those who supported more central control.

The Bank Act of 1935 greatly reduced the power of the branches and greatly increased the power of the board of governors. For the first time, there was a single body in charge of a national monetary policy. Branches had to operate within the rules and regulations set forth by the Board of Governors.

Should it be a monopoly? This was not the case in the 1800s. There were lots of state banks that issued currency. Some had very tight restrictions, some had loose restrictions, meaning that currency from different states had different exchange values. it was a real mess.

No, it doesn't have to be a monopoly. But having a stable benchmark currency is a necessity for a thriving economy.

Answer 2

Member Banks are the owners of the Fed. It is not government owned to keep out politics, for the most part.

Answer 3

Why, indeed? It's an abdication of the responsibilities that the Constitution placed with Congress, is what it is.

http://www.worldnewsstand.net/today/articles/fedprivatelyowned.htm
http://www.save-a-patriot.org/files/view/whofed.html