Should America Abolish the Federal Reserve System

Should the United States Abolish the Federal Reserve System?

The Federal Reserve System was instituted on December 23rd, 1913 by an act of Congress and serves as the central bank of the United States (“Federal Reserve System”). It is made up of twelve Reserve Banks with its headquarters in Washington D.C. The Board of Governors consists of seven members and two of them are designated and confirmed Chairman and Vice Chairman. The Chairman and Vice Chairman serve for four year terms while the other members serve fourteen year terms (The Structure of the Federal Reserve System). The responsibility of the Federal Reserve System is to conduct the nation 's monetary policy, supervise and regulate banking institutions, maintain the stability of the financial system and provide financial services to depository institutions, the U.S. government, and foreign official institutions (Bachman, Jess). Henry Ford once said, “It is well enough that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be revolution before tomorrow morning.(Conspiracies of the Federal Reserve….)” There are but a few persons who truly know about the Federal Reserve System. What people must realize is that the Federal Reserve System virtually controls the monetary system of the United States, yet it is accountable to no one. It has no budget, it is subject to no audit and no Congressional Committee knows of, or can truly supervise its operations. Therefore, the United States of America should abolish the Federal Reserve System simply because it lacks transparency, it caters to the rich and wealthy of the nation instead of the poor and middle class and it is not a government institution or a bank. If this is the case then why should a private institution be in control of the government funds and why should an institution that is not a bank serve as the central bank of a nation?
There are many who question the Federal Reserve and why it is not transparent like other central banks in developed countries and also whether or not this lack of transparency will affect the economy. For many years the Federal Reserve has explicitly defended secrecy and opposed full disclosure. They believe that fuller disclosure will promote unnecessary volatility in financial markets, benefit certain speculators and interfere with the execution of money policy(Bachman, Jess). The fact is that secrecy of the monetary policy will increase financial market uncertainty, unvolatility, and larger uncertainty premiums in interest rates. According to the President of the Federal Reserve Bank in Kansas City, a potential solution to the problem of lack of transparency is “advancing how they use the minutes”(Grurdman, Don J.). He believes that forcing the Federal Reserve System to be more honest and open when crisis occur, allowing them to be questioned on the economic policy and giving wide publicity to their decisions will help bankers and investors make wise and safe decisions that can help the market to grow, but since the Federal Reserve was created it has always operated in the shadows, without sufficient scrutiny or oversight of its operations. In one instance, the Federal Reserve can enter into agreements with foreign central banks and foreign government yet the Government Accountability Office is prohibited from auditing or even seeing these agreements(Conspiracies of the Federal….). If the Federal Reserve System cannot operate in openness then why should it be in operation?
The Federal Reserve was always in favour of the rich of the country. There are three financial forces that keep the poor and middle class working hard and struggling financially. These forces are taxes, debt and inflation and retirement (Kiyosaki, Robert T.). It is important to understand that these forces are kept alive by the Federal Reserve System’s license to print money. America was basically tax-free in the early days. In 1862 the first income tax was used to pay for the Civil War. In 1895, the Supreme Court ruled that income tax was unconstitutional but however, in 1913 when the Federal Reserve System was created, income tax was made permanent. By this the rich could put their hands in the people’s pockets via taxes permanently. Also, inflation which is caused by the Federal Reserve printing money to pay the government’s bills makes the cost of living very expensive for the poor and middle class but the rich get richer since they are the ones who own the big businesses. Additionally, in 1974 the U.S. Congress passed the ERISA and this forced Americans to invest in the stock market for their retirement through mediums such as 401(k). Such investments normally have high fees, high risks and low returns. Because of this, today many people do not have enough money to retire because they have lost all their wealth in the stock market crash (Kiyoskai, Robet T.). When we look at the relationship between the Federal Reserve and the three forces we can indeed conclude that the poor and middle class have not been served justice. If the Federal Reserve System is one that is biased and caters to only one class in the American society then it should without a doubt be abloished.
Thomas Jefferson, declared, "If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered”(Supinski, Ron). From the beginning it was persons like Thomas Jefferson who knew that the idea of allowing private banks to control the nation’s funds would not to be beneficial to the American society and this is why the Federal Reserve System should be abolished. It is a privately owned bank. In the Federal Reserve decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government (Brown, Ellen). The shareholders of the Federal Reserve are private banks. In fact 100% of its shareholders are private banks and none is owned by the government (Brown, Ellen). By law, ownership of a certain amount of stock is a condition of membership so if the government is not a member of this institution, why is it in charge of the nation’s monetary system? Shouldn’t this be one aspect the government should have the ultimate say in? In the case of John L. Lewis/Appellant vs. The United States of America/Apellee, it was held: It is clear from this that in some circumstances, the Federal Reserve Bank can be considered a government "instrumentality", but cannot be considered a "federal agency", because the term carries with it the assumption that the federal government has direct oversight over what the Fed does. Of course it does not, because most people who know about this subject know that the Fed is "politically independent. (Court Rules Federal Reserve is Privately Owned) Because of this ruling, the United States government was not entitled to pay John Lewis for the injuries he received from an accident that involved a vehicle belonging to the Federal Reserve. It is quite evident now that the Federal is indeed a private institution and because of this it should not control the United States’ monetary system and it should be abolished.
Up to this present day many Americans still argue that it was the Federal Reserve System that saved the United States from the Panic of 1907. It was believed that the United States unlike European states was vulnerable without a central bank and if the Federal Reserve hadn’t come along to extend the supply of money during periods of low cash reserves, the country was going to undergo the most severe and far reaching money panic in its history. Sadly, the Federal Reserve still failed in preventing the even worse bank failures in the Great Depression. What Americans must understand is that the Panic of 1907 was not caused because the United States did not have a central bank. The main cause of the crash was stock market and real estate speculation (Flodvary, Fred). This shows that if there was a central bank established, there may have been the same results since there is no proof of the Federal Reserve being the one to save the economy of the United States during that time. I must remind the audience that from the beginning when idea of the Federal Reserve came into existence it was always a big secret where everyone was left in the dark. Many secret meetings were held on Jerkyll Island where banking ideas were discussed and the plan eventually became the Federal Reserve System (Foldvary, Fred). The Federal Reserve System did not come into existence to help the Americans overcome the panic of 1907 but it was created with the interest of its creators in mind. Even when the Federal Reserve Act was passed in Congress, there were only three members present. This was because there were many persons who really knew what the future of the American economy in the hands of the Federal Reserve looked like and they had opposed it.
The monetary system is not what Americans are led to believe. The creation of money has been "privatized," or taken over by private money lenders and Thomas Jefferson called them “bold and bankrupt adventurers just pretending to have money” (Brown,Ellen). The banking system has been contrived by the Federal Reserve so that big banks always get bailed out by the taxpayers from their risky ventures. The deceptions of the Federal Reserve concerning the money scheme has been unraveled and a crystal clear picture is presented of the financial abyss towards which America has been led to. There is workable alternative to the Federal Reserve, one that was tested in colonial America and is grounded in the best of American economic thought, including the writings of Benjamin Franklin, Thomas Jefferson and Abraham Lincoln. This alternative is a federal agency owned by the government that can be subject to an audit, has a buget, accountable to someone and in a position where its operations can be truly supervised. This idea has already been thought out by America’s greatest minds. It is now that time for the American government to take those ideas in order to continue in the best interest of its people and abolish the Federal Reserve System for good!

Works Cited

Bachman, Jess. "A Visual Guide to the Federal Reserve System." (2009).
Brown, Ellen. The Web of Debt: The Shocking Truth about Our Money System. Third Millennium Press, 2008.
—. "Who owns the Federal Reserve?" The South Florida Business Journal (2008): 73-75.
Conspiracies of the Federal Reserve System. Perf. Ron Paul. 2008.
Court Rules Federal Reserve is Privately Owned. No. 04-2357. United States Courts of Appeal. 28 April 2005.
Federal Reserve System. 2010. 20 October 2010 <www.britannica.com>.
Foldvary, Fred E. "The Panic of 1907." 1 May 2007. 12 October 2010 <www.freerepublic.com/focus>.
Grurdmann, Don J. "The Truth about the Federal Reserve- The Biggest Financial Crime in the History of the United States." (n.d.): 1-2.
Kiyosaki, Robert T. Rich Dad 's Conspiracy of the Rich. New York: Business Plus and CASHFLOW Technologies, Inc., 2009.
Supinski, Ron. "The Federal Reserve System is a Private Bank." 8 October 1992. 15 October 2010 <www.the7thfire.com/Politics%20and%20History/Federal-Reserve.html>.
The Structure of the Federal Reserve System. 3 July 2003. 2 November 2010 <www.federalreserve.gov>.

Cited: Bachman, Jess. "A Visual Guide to the Federal Reserve System." (2009). Brown, Ellen. The Web of Debt: The Shocking Truth about Our Money System. Third Millennium Press, 2008. —. "Who owns the Federal Reserve?" The South Florida Business Journal (2008): 73-75. Conspiracies of the Federal Reserve System. Perf. Ron Paul. 2008. Federal Reserve System. 2010. 20 October 2010 &lt;www.britannica.com&gt;. Kiyosaki, Robert T. Rich Dad 's Conspiracy of the Rich. New York: Business Plus and CASHFLOW Technologies, Inc., 2009.