(a) The Fed is a privately-owned profit-seeking entity
(b) The Fed is owned by a group of powerful elite international bankers
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Dear XXX:
I don't know whether you have a chance to verify independently whether the Fed is "a privately-owned profit-seeking entity". But when I read the Federal Reserve System/Purposes and Functions document (http://www.federalreserve.gov/pf/pdf/pf_1.pdf), I can only conclude that the Fed's Board of Governors is a public sector entity, similar to the Bank of Canada's Board of Directors. (http://www.bankofcanada.ca/en/about/board.html) Please note that page 11 mentions that income/earnings from the Fed are returned to the Treasury.
(page 11) "..... The income of the Federal Reserve System is derived primarily from the interest on U.S. government securities that it has acquired through open market operations. Other major sources of income are the interest on foreign currency investments held by the System; interest on loans to depository institutions; and fees received for services provided to depository institutions, such as check clearing, funds transfers, and automated clearinghouse operations.
After it pays its expenses, the Federal Reserve turns the rest of its earnings over to the U.S. Treasury. About 95 percent of the Reserve Banks’ net earnings have been paid into the Treasury since the Federal Reserve System began operations in 1914. (Income and expenses of the Federal Reserve Banks from 1914 to the present are included in the Annual Report of the Board of Governors.) In 2003, the Federal Reserve paid approximately $22 billion to the Treasury. ....."
As to the suggestion that "the Fed is indeed owned by a group of powerful elite international bankers", I can only think of 3 remotely possible answers: China (indirectly thru the holding of US debts); IMF (International Monetary Fund) and the World Bank. However, when I examine the Fed's international portfolio (page 5 of same doc), I cannot find any mentioning of direct ownership by international bankers.
(page 5) "...... The Chairman has formal responsibilities in the international arena as well. For example, he is the alternate U.S. member of the board of governors of the International Monetary Fund, a member of the board of the Bank for International Settlements (BIS), and a member, along with the heads of other relevant U.S. agencies and departments, of the National Advisory Council on International Monetary and Financial Policies. He is also a member of U.S. delegations to key international meetings, such as those of the finance ministers and central bank governors of the seven largest industrial countries—referred to as the Group of Seven, or G-7. He, other Board members, and Board staff members share many international responsibilities, including representing the Federal Reserve at meetings at the BIS in Basel, Switzerland, and at the Organization for Economic Co-operation and Development in Paris, France. ....."
Conclusions:
Based on the above, I would submit that:
(a) the Fed is not a privately-owned profit-seeking entity
(b) the Fed is not owned by a group of elite international bankers.
Note: I am talking abt direct ownership, as opposed to the Seven Sisters type of international control (http://en.wikipedia.org/wiki/Seven_Sisters_(oil_companies))
I am open to suggestions and stand to be corrected.
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Here are the links to the website of The Fed Reserve Board:
* Board Members: http://www.federalreserve.gov/aboutthefed/bios/board/default.htm
* The Fed Reserve Act: http://www.federalreserve.gov/aboutthefed/fract.htm
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The info below is from Wikipedia: http://en.wikipedia.org/wiki/Federal_Reserve_System
Commissioner / Entered office /Term expires:
1. Ben Bernanke (Chairman) / February 1, 2006 / January 31, 2020 January 31, 2014 (as Chairman)
2. Janet Yellen(Vice Chairman) / October 4, 2010 / January 31, 2024 October 4, 2014 (as Vice Chairman)
3. Kevin Warsh / February 24, 2006 / January 31, 2018
4. Elizabeth Duke / August 5, 2008 / January 31, 2012
5. Daniel Tarullo / January 28, 2009 / January 31, 2022
6. Sarah Bloom Raskin / October 4, 2010 / January 31, 2016
7. Vacant
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**** Updated info: Nov 17, 2010 ****
Dear YYY:
There have been no lacks of academic papers, policy analyses, govt proclamations, partisan attacks, and other types of responses to the global financial crisis. Since I don't want to bore you with more detailed technical explanations, my comments will be brief here:
* I only wish the recent global financial crisis were as simple as Economic-101. According to Wikipedia, low interest rate (easy credit conditions) is only one of the thirteen factors that have contributed to the collapse. (ref: Wikipedia/Financial crisis of 2007–2010 http://en.wikipedia.org/wiki/Financial_crisis_of_2007-2010)
* Hind sight is 20/20 and pointing finger is easy to do after-the-fact. Let's not forget government downsizing and deregulation were very popular and en vigueur in the 90's (e.g. Program Reviews and Regulatory Reform in Canada) and those who did sound the alarm were run over by deregulation champion such as Alan Greenspan.
* In simple terms and with the advantage of hindsight, the US financial failure could be attributed to:
(a) Two types of errors: Human Errors (e.g. poor assessment of risks) + Systemic Errors (e.g. the unregulated "shadow banking system"); plus,
(b) An accumulation of national, bilateral and multilateral conditions leading up to the total collapse (e.g. consumers maxing out their credits, production and services offshoring, investment and trade deficits)
Related links:
* US Federal Reserve/FAQs/Who Owns the Federal Reserve: http://www.federalreserve.gov/generalinfo/faq/faqfrs.htm#5* Wikipedia/Shadow Banking System: http://en.wikipedia.org/wiki/Shadow_banking_system* Wikipedia/Government Policies and the Subprime Mortgage Crisis: http://en.wikipedia.org/wiki/Government_policies_and_the_subprime_mortgage_crisis
