Should Banking and the Federal Reserve System be Government Run?

Hey, Jimbo -

Your question and comments have been debated for decades and have influenced the evolution of modern central banking today.

- Re: Should Banking and the Federal Reserve System be Government Run?

This question was actually one of the central questions debated when the Federal Reserve was chartered.

Prior to 1900, there was incredible and significant resistance to a government controlled central bank. For the U.S., it was mainly a question of the government having too much power. For other countries it was the inevitable abuse of such power by governments who could not resist the temptation to "print" their way out of debt/

After the panic of 1907, sentiment toward favoring a central bank to stem panics. The debate was heated. Republicans favoring a 100% private central bank and Democrats favoring a 100% government controlled bank. The compromise bill passed in 1913 called for private dominated branches overseen by a government controlled "Board of Directors"

Quite frankly this structure proved flawed and unworkable. The branches resented oversight so there was no coordinated monetary policy. The branches were also dominated by the large banks who showed remarkable indifference to failures of smaller banks. There was aalso some congressional influece over their home branches. In addition, these branches paid their executives lucrative salaries and gave them plush offices.

It really came to a head when FDR was elected. The country needed a coordinated effort to get out of the depression and the autonomous branches were a hindrance.

The Bank Act of 1935 was a major restructure of the Fed power structure. The Board of Directors was transformed into the Board of Governors and given almost complete authority over all the branches. The Branch's power was reduced to control over day to day operations.
The Board of Directors was also changed to Board of Governors. It was also granted relative independence within the government to reduce congressional influence.

For more clarification, check out how Hoovers classifies them:
http://www.hoovers.com/free/search/simpl...

- Re: I am under the opinion that the Federal Reserve System and our Banking industry has gotten us into this huge financial mess we are in today.

No question that unregulated and unsound banking practices led to the current crisis, and that the Federal Reserve has some culpability. But I think the chief blame goes to the person in charge who ddetested almost any financial regulation and appointed a Fed Chairman, a Treasury Secretary, and a SEC chairman who actively fought regulating the industry (as is coming out from whistleblowers).

- Re: I am also under the opinion that the Federal Reserve System as well as our Banking Industry needs to be under a much closer eye then they are today

I think most would agree that the Banking Industry needs a closer eye. But why let the the administration, especially the Treasury Department, off the hook on this one? The executive branch is squarely responsible for effective execution of regulations and they screwed it up. In fact, regulation of the banking industry is split between the Fed and the Treasury.

- Re: Our Federal Reserve System needs to be totally transparent and a public entity,

Absolutely, as should it be with almost all government agencies.


You have some good thoughts on the issue. I recommend delving deeper in it with more facts to back up your opinion.

I think the government is covertly being run by the banks. The banks are like a fourth branch of government.

Think about it.

The banks were first created by Alexander Hamilton and Aaron Burr.
Chase Bank which has now merged with J.P. Morgan, still operates under it's original 1799 charter. Chase Bank still owns the dueling pistols used by Hamilton and Burr.

The Chase Bank was the Rockefeller Bank. John D. Rockefeller, Jr. was married to Sen. Nelson Aldrich's daughter. Sen. Aldrich sponsored the legislation that created the federal reserve bank.

You can read about the Whitney family and the Payne family and see the connections they had between politics, standard oil and the banking business.

Government cannot operate without the banks, and the banks cannot operate without the help of government.

One the politicians leave office, they are naturally attracted to the greedy profession of banking. Look at Prescott Bush and his relationship with Brown Brothers Harriman. Take a look at Archibald Roosevelt, son of FDR who worked at the Chase Bank for Rockefeller.
The list of people moving from government to banking is very long indeed.

How many treasury secretarys can you count that came from the banking field and went back into it after leaving office? There is a revolving door between politics and banking that is mostly invisible to the public.

So, where does banking end and government begin? Probably the answer can be found on the balance sheet of the companies in their portfolio's.

If all the former politicians of the past 100 years, their families, and their descendants had all their money tied up in J.P. Morgan Chase Bank/Citicorp, with the descendants of those politicians on the boards of directors, that almost sounds like a government banking operation to me.

There is no hope for us, my friend.

It will have to be soon. The fractional reserve "system" has failed or succeeded depending how you look at it. There cannot ever be the unending growth that this system requires. It is a Ponzi scheme that have benefited the big world banking families until now. The population growth and the US consumerist society kept the balls in the air but can no longer do so. In part because of the 'new' derivitives market has created more debt than the total amount of money in the world...Many past Presidents have spoken about the banking cabal and a couple died after trying to nationalize our money...Andy Jackson only had three attempts on his life though.

We live in interesting times...glad I am not young so won't have to see the worst of the impending "reorganization". I was in South America in the 70s when Argentina went down. NOT pretty!

If you get to the end of this film and your answer is no, then I can't help you. No one can. Every day banks are one thing, but the FED has to go.

(its educational, It is not conspiracy propaganda or any thing like that.)

Money, banking and the Fed.
http://www.youtube.com/watch?v=iYZM58dul...

@smart pants.
Watch the film man. I agree we shouldn't be propping up individual banks and about government control, but the Fed is another story.

JFK actually started a government created currency, which would have replaced the Federal Reserve money system. He was quickly killed and his money removed from US society. This is a MUCH MUCH bigger issue than you can imagine.

The Federal Reserve system is fine the way it is. Congress should get out of it.
The Fed is necessary to regulate Interstate Commerce, money supply and through policies help control the economy through controlling deflation and inflation.
Notice the word is HELP. They do not control the economy. Government policies and regulations have a huge effect on the economy. If you wish to encourage something subsidize it. If you want to discourage something tax it. The government controls what is subsidized and what is taxed.

We don't need more government control. The markets do just fine without all this government meddling. There are too many banks that have not failed which ought to becuase the government is propping them up. It's bogus. The natural consequences of stupid business practices is business failure. The government meddling hand has removed that consequence, and has removed the incentive for good business practices.

We don't need more government interference.

Stop reading your nonsense propaganda. The Federal Reserve is run by a board of governors appointed by the President of the United States and confirmed by the Senate, just like every other federal agency.

It really, and I mean REALLY dosen't matter what any of "US" think.The powers that be do not give a... what any of us think! so the Question is do any of us realize how insignifcant we are?We are all just Sheep being led to the slaughter.Is that transparent enough for you!?

Anyone can explain to me how Maddof stole money from various parties for all these years??? And your government has nothing to deal with it for all these years?