Do you think the Federal Reserve should be abolished?

Question

Considering that the Federal Reserve is privately owned and operated for a profit and the dollar is not backed by gold - do you think the Federal Reserve should be abolished and the government should print the currency? Perhaps also, once again back the dollar with gold? Why or why not?

Answer 1

1. Yes, the dollar is not backed by gold. However, neither is any other governmental currency in the world. There are a myriad of reasons for this, but probably one of the main reasons is so a central bank to have the ability to control the availability of credit. There is really too much to explain fully. Also, at $670 per troy ounce, there is only about $2.7 trillion of gold in the entire world. Since the U.S. economy alone is five times larger than that amount, it would be a fractional backing system anyway.

2. The Federal Reserve is NOT PRIVATELY OWNED. It is setup like a private entity but in reality is a government controlled decentralized central bank system. The Federal Reserve System is controlled by a Board of Governors, also known as the Federal Reserve Board. The Board of Governors, located in Washington, D.C., provides the leadership for the System.

The Board of Governors is the national component of the Federal Reserve System. The board consists of the seven governors, appointed by the president and confirmed by the Senate. Governors serve 14-year, staggered terms to ensure stability and continuity over time. The chairman and vice-chairman are appointed to four-year terms and may be reappointed subject to term limitations.

3. Private individuals, corporations and foreign governments cannot, BY LAW, hold more than a small amount of Federal Reserve stock. Also, stock of a Federal Reserve district bank cannot be bought or sold on the open market.
http://www.law.cornell.edu/uscode/html/uscode12/usc_sup_01_12_10_3.html

4. A network of 12 Federal Reserve Banks and 25 branches make up the Federal Reserve System under the general oversight of the Board of Governors. Reserve Banks are the operating arms of the central bank.

Each of the 12 Reserve Banks serves its region of the country, and all but one have other offices within their Districts to help provide services to depository institutions and the public. The Banks are named after the locations of their headquarters-Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.

5. National banks are required to be member banks of the Federal Reserve. Some state banks, if they meet certain requirements, can choose to become member banks of the Federal Reserve. A member bank is REQUIRED BY LAW to subscribe to the stock of the Federal Reserve bank in their home district. This stock cannot be sold, traded or given away. This allows the Federal Reserve system some control over the amount of reserves a bank maintains. The Federal Reserve does require a bank to maintain a certain percentage of capital as a reserve, but the amount held by the Federal Reserve guarantees the member bank doesn't short their reserves.

Approximately 38 percent of the 8,039 commercial banks in the United States are members of the Federal Reserve System. National banks must be members; state-chartered banks may join if they meet certain requirements.

Another interesting fact: The Federal Reserve owns outright $11 billion in gold reserves as evidenced by the Fed's balance sheet. http://www.federalreserve.gov/Releases/h41/Current/

Another interesting fact #2: The Federal Reserve is required to return interest collected less a small amount for operations on U.S. Government securities to the U.S. Treasury. In 2006, the Federal Reserve collected $36.5 billion on the $770 billion in U.S. Government debt that it held. Of that amount, $29.1 billion was returned to the U.S. Treasury. Don't believe me? Check the INDEPENDENTLY AUDITED financial statements of the Federal Reserve banks for yourself. They can be found in the Federal Reserve's ANNUAL REPORT to Congress.
http://www.federalreserve.gov/boarddocs/rptcongress/annual06/pdf/audits.pdf

Another interesting fact #3: The Federal Reserve only holds about 8% of the total U.S. debt. Another 44% is held by THE U.S. GOVERNMENT! Yes, the government lends money to itself. Only about 47 to 48% of the total U.S. debt is held by private individuals, corporations and foreign governments.
http://www.fms.treas.gov/bulletin/index.html
http://www.treasurydirect.gov/NP/BPDLogin?application=np

6. The Federal Reserve doesn't print money. The Bureau of Engraving and Printing (a part of the Treasury Department) does. The U.S. Mint makes the coins. However, the Federal Reserve does control the money supply using several methods. Federal Open Market Operations, Interest rate changes, and member banks reserve requirements are just some of the methods used by the Federal Reserve to control the money supply.

BTW, did you know anytime you borrow money or use a credit card, you are contributing to the creation of money? Here is a simplified example. I go to my bank and deposit $1,000 in my savings account. Let's assume the reserve requirement is 10%. This means my bank has to keep 10% of all deposits available. The other 90% can be used to earn money so they can pay depositors interest. You go into the same bank and apply for a loan of $900, which the bank grants. Congratulations, you just contributed to an increase in the money supply. I still have my $1,000, it is deposited in the bank and it belongs to me. You now have $900, that you will eventually have to pay back, but you can use it now to buy things. In my example, there is only the $1,000 that I deposited, but actual amount of money circulating is $1,900.

Answer 2

I love how they collect money for necessary government services with low overhead and regulate inflation to help stave off more severe boom-and-bust cycles. The money they collect goes to the military, securing the border, and the War on Drugs so there's something for you to like too! :) However I was unaware that the IRS served as the collection agency of the Federal Reserve. Can you point me in a direction so I can read some more about it? Also, while we're talking about events nearly 100 years ago, can you tell me what you love most about Jim Crow laws enacted in the South following Reconstruction and repealed over the objections of conservatives between the 1930s and the 1960s?

Answer 3

Not unless you want to have inflation that would destroy our economy.

First--the Fed doesn't print money--that's done only by the Treasury department. The Federal Reserve ssystem is a distributor only.

Second, the "private ownership and for profit aspect are there as a check on government irresoonsibility--effectively preventing the state from printing unlimited amounts of currency (among other things)--while the for-profit element forces the member banks who provide the capital ("own") to be fiscally responsible.

As for reverting to a gold standard--that simply will not work. It is attractive to many people--as a "real" value, it would provide a built-in added safeguard against government irresponsibility. But--in our modern industrial civilization, there's simply nowhere near enough gold--evenif you sued every single ounce the human race has ever mined--to serve as a medium of exchange.

The Fed serves as a "balancing force." To use an analogy, it is like the vale on a fuel line--it regulates the flow of money so that neither too much or too little is being added to/pulled out of circulation.

The current problems with the housing market are a good example of how the Fed works. Here we had a mounting "liquidity crisis." The cause-the irresponsible lending of subprime borrowers--isn't the Fed's concern. But the fears of man financial institutions, as well as the consequences of the "meltdown" of this sector--were causing a restriction in available funds to drive the economic life of the country. The Fed stepped in and released a large sum ofmoney-making it available for reguar banks to use. In effect, they stopped a panic. And--as conditions ease, the Fed will later withdraw those funds if needed, to prevent an excess of cash from causing excess inflation.

Look, our economic/financial system isn't perfect. But in the last 665 years, while we've had recessions (and will continue todo so) we have not had another Depression--and NONE of the frequent and devastating panics that used to be a regular feature o fthe capitalist economies. The Fed is one of the most important tools that makes that high degree of stability possible.

Answer 4

Yes but we would have to go back to the gold standard. Kennedy wanted to do just that before he was murdered. The bankers will never give back the power they created with the federal reserve. They are for the one world currency.

Answer 5

Going back to the gold standard would cause the economy to collapse.

Answer 6

Going back to the Gold backed dollar would be going back to the 1870s. Trying to back a currency with gold is impossible nowadays since there is a large amount of paper money and not of lot of gold the dollar would be worthless.

Answer 7

Ah. You fell into the trap of listening to conspiracy theorists istead of doing your own study of the federal reserve. Gain some real knowledge on the subject and then I'd be delighted to discuss abolishing the federal reserve. But it needs to be an intelligent discussion.

Answer 8

Yes! It's whats ripping this country apart piece by piece. It amazes me how uninformed our population is about this stuff.

It's not just tearing America apart concerning our money, its EVERYTHING. The presidential candidates are payed by the bankers on Wall Street, the income tax is enslaving us (by the way, you work four months a year just to fulfill that tax), and our debt has reached 9 TRILLION.

I forget the name, but who ever said that the Fed prevents inflation is wrong.... That's what the public was told so it could seem like a balanced system and the rich bankers could get away with it. Of course, it's whats putting us into tremendous debt and its eventually going to cause a major inflation.

Answer 9

Back to gold standard??? Mmmm, I wonder what's your stance on tooth fairies and santa?
On a serious note, the status of Feds is much more complex than just being privately owned, and the idea originates in the great American dream of free enterprise. The bottom line though, is that there is no reason why the government should worry about currency (unless one has socialist views, in which case the government knows everything better than its citizens). As for making profit, I don't see what is the problem with that: economy is not a charitable activity, and those who bear the risk get to reap the rewards (again, unless one has socialist views, so one carries the risk and the government reaps the rewards).
Gold standard is a tried and failed idea, so I am not sure what sort of benefit do you see in introducing such a sure-to-fail system.

Answer 10

I absolutely do. It makes me wonder, why would you want foreigners controlling your currency ? The Federal Reserve lends money to the US government, which is repaid with interest, i e national debt.
The Congressional vote that enacted the Fed was taken while most of Congress was gone for Christmas holidays.
The 16th Amendment to the Constitution was never properly ratified by the states.

:-o

Answer 11

Absolutely.
The Founding Fathers (particularly Thomas Jefferson), among others, warned against allowing banks/bankers to have control of the countries economy and money. Exactly how our grandparents/great-grandparents were duped into allowing the Federal Reserve be created, much less continue to exist, I have no idea.

EDIT:
"Give me control of a nation's money and I care not who makes it's laws" -- Mayer Amschel Bauer Rothschild

"Most Americans have no real understanding of the operation of the international money lenders. The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and manipulates the credit of the United States" -- Sen. Barry Goldwater (Rep. AR)

"This [Federal Reserve Act] establishes the most gigantic trust on earth. When the President [Wilson] signs this bill, the invisible government of the monetary power will be legalized....the worst legislative crime of the ages is perpetrated by this banking and currency bill." -- Charles A. Lindbergh, Sr. , 1913

"From now on, depressions will be scientifically created." -- Congressman Charles A. Lindbergh Sr. , 1913

"The financial system has been turned over to the Federal Reserve Board. That Board asministers the finance system by authority of a purely profiteering group. The system is Private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people's money" -- Charles A. Lindbergh Sr., 1923

"The Federal Reserve bank buys government bonds without one penny..." -- Congressman Wright Patman, Congressional Record, Sept 30, 1941

"We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it". -- Congressman Louis T. McFadden in 1932 (Rep. Pa)

"A great industrial nation is controlled by it's system of credit. Our system of credit is concentrated in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the world--no longer a government of free opinion, no longer a government by conviction and vote of the majority, but a government by the opinion and duress of small groups of dominant men." --President Woodrow Wilson

"If Congress has the right [it doesn't] to issue paper money [currency], it was given to them to be used by...[the government] and not to be delegated to individuals or corporations" -- President Andrew Jackson, Vetoed Bank Bill of 1836

"I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the government at defiance. The issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs."--Thomas Jefferson, U.S. President.

"History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and it's issuance". -- James Madison