For most of my life, I’ve been led to believe that the Federal Reserve is a separate entity that operates independently of the Federal Government. This “separation” allowed the Federal Reserve to operate “independently” of the Federal Government.
Over the years, I came to doubt that Federal Reserve and Federal Government were truly separate and able to act independently of each other. But it was not absolutely clear to me whether the Federal Reserve was, in fact, a dependent agency of the politicians running the Federal Government, or if the Federal Government was a dependent agency of the bankers running the Federal Reserve.
• Recently, however, former Federal Reserve chairman Alan Greenspan was quoted as claiming that he and the Federal Reserve had no real independence from the Federal Government’s control, and he was “just following orders” (so to speak) issued by the Federal Government when he administered Federal Reserve policy from A.D. 1987 through A.D. 2006.
I was skeptical of Greenspan’s claim.
I suspected that Greenspan (88 years of age) was simply getting old and didn’t like being blamed for the economic conditions that precipitated the Great Recession in A.D. 2008. So, he wanted to escape personal responsibility for having caused idiotic financial conditions that might yet collapse the US economy. I suspected that he hoped to evade personal responsibility by denying that he was ever really in control during the 19 years he seemingly ruled the Federal Reserve.
Of course, if he wasn’t really in control, he wasn’t really the economic “maestro” that many people believed. He was, in fact, just a press secretary, a front man, a talking head, for whoever is really in control of the Federal Reserve and perhaps even in control of the Federal Government.
I found all of those implications hard to believe. Surely, the Federal Reserve must have some independence. Greenspan, Bernanke and now Yellen must have some independent control, right?
But today, one of my readers (“Cody”) posted a couple of comments on my blog that provide evidence that the Federal Reserve is actually just an agency of the Federal Government.
• First, Cody pointed out the Federal Reserve’s website is at http://www.federalreserve.gov/ . Note the “.gov” suffix on the Fed’s URL.
If the Federal Reserve were truly an independent entity, I’d expect its website’s URL to end in “.com” or “.net” or some such—but not in “.gov”.
So far as I know, the “.gov” suffix is reserved for only for agencies of the “government”. The Fed’s use of the “.gov” suffix surely implies (and might even prove) that the Federal Reserve is an agency of the Federal Government.
• Second, Cody supplied a quote from a Federal Reserve publication that can be downloaded at http://www.federalreserve.gov/pubs/frseries/frseri.htm which reads:
“As they carry out their duties, members of the [Federal Reserve] Board routinely confer with officials of other government agencies, representatives of banking industry groups, officials of the central banks of other countries, members of Congress and academicians.”
The word “other” in relation to the term “government agencies” clearly implies that the Board of the Federal Reserve views itself as just another “government agency”.
• I won’t say that the “.gov” suffix on the Fed’s website URL, or the Fed’s reference to “other government agencies” is absolute proof that the Federal Reserve is an agency of the Federal Government.
But I will say that the Fed’s own words clearly indicate that the Federal Reserve Board is an agency of the Federal Government–just as Greenspan claimed in his recent speech.
If so, the Federal Reserve is no more “independent” from control by the Federal Government than are the Department of Agricultural, the Bureau of Alcohol, Tobacco, Firearms and Explosives Bureau, or Homeland Security.
If so, I suspect that persistent claims of Federal Reserve “independence” are lies that were probably designed to keep the public from looking too closely at the Fed and learning how and why our monetary system really operates.
If so, it appears that the Federal Reserve should be just as open to audit and public scrutiny as any other agency of government.
• More, if the Federal Reserve is merely an agency of the Federal Government, and if (under Quantitative Easing 1, 2, & 3) the Federal Government was selling its bonds (that no one else would buy) to the Federal Reserve, wasn’t the Federal Government actually selling its bonds to itself?
Wasn’t the Federal Government’s sale of its bonds to the Federal Reserve fundamentally identical to a man with two bank accounts (that were both empty) depositing NSF checks from bank account #1 into bank account #2, and then from bank account #2 into bank account #1, in order to create the illusion that both accounts were solvent when, in fact, both were insolvent?
If you or I used two insolvent banks accounts to create the illusion that they were actually solvent and our checks were good, wouldn’t we be guilty of fraud?
If the Federal Government has been selling its bonds (that no one else in the free market would buy) to the Federal Reserve (an agency of the Federal Government that simply spins fiat dollars out of thin air to “pay” for the bonds) for the purposes of 1) creating the illusion that the US Bonds have value; and 2) the Federal Government has a sufficient capital to continue operations—isn’t that also evidence of our government’s intent to deceive and defraud the American people and even the people of the world?
If the Federal Government can only sustain the illusion of solvency by writing $4 trillion in QE funds that were not simply “spun out of thin air” but “spun out of thick fraud,” would it be true that all four trillion of those fiat dollars are the financial equivalent of NSF checks written on a closed bank account?
If the Federal Government can only maintain the illusion of solvency by means of a massive ($4 trillion QE) fraud, could that fraud be construed as evidence that the Federal Government is already so broke, so bankrupt, and so desperate that it is certain to be caught in its fraud and then expire in bankruptcy at some future date?
Is there any conceivable means by which the Federal Government can continue its massive deception indefinitely?
If not, how long can the Federal Government successfully conceal this massive fraud?
If the Federal Reserve is only an agency of the Federal Government, and if the that agency is the source of fictional funds used to shore up the illusion of Federal Government solvency, should average Americans merely snicker at another crime committed by Obama? Or should Americans be working diligently, even desperately, to save their wealth in a medium that can’t be destroyed or repudiated when the Federal Government is finally forced to admit its fraud?
If the Federal Reserve is, as Alan Greenspan claimed, only an agency of the Federal Government, should Americans be amused, indifferent, or terrified?
If the Federal Reserve is only an agency of the Federal Government, I can’t see how the resulting financial fraud can continue much longer. They might be able to hold this system together for another six years, but I wouldn’t be surprised if the whole thing collapsed within six months, or even six weeks.
If you’re not already prepared for what might be coming, I think you’d better do all you can as fast as you can to get ready.