The Federal Reserve System (the Fed) constitutes the central bank of the United States. Created in secret in 1913, the Federal Reserve Act was passed by Congress in a controversial holiday session near Christmas of that year. Initially, the Fed was restricted by a relationship between currency and gold but there is a good deal of evidence that from the very beginning, the Fed was printing more money than it was legally allowed. The Great Depression itself was likely set off by the Fed's overprinting of money and led ultimately to the abrogation of the gold standard, which has allowed the Fed, unfettered, to issue even more currency.
The Fed's main duties are to provide a level of employment while maintaining financial stability and low inflation. Of course, it is Fed money printing that is responsible for inflation in the first place and one could argue, generally, these goals are at cross-purposes. But when it comes to the Fed, logic seems to have little to do with its activities.
The Fed is composed of the Board of Governors (Board), the Federal Open Market Committee (FOMC) and 12 regional Federal Reserve Banks. Its membership includes numerous US member banks and councils. The FOMC sets monetary policy, or at least that's how it is supposed to work. In fact, the Fed chairman has enormous clout and virtually dictates Fed policy in the modern era. While the Fed's decisions do not have to be "ratified by the President or anyone else in the executive or legislative branch of government," according to the Fed, it has considerable congressional oversight and many of its top members are presidential appointees.
The government sets the salaries of the top people, as well, but in practice, little impedes the Fed. By some estimates, the Fed has dumped up to US$20 trillion or more into the world economy since the 2008 economic crisis. The Fed, it could be said, has virtually reliquified the dollar reserve system on its own, a feat so massively arrogant that many outside critics believe it cannot help but end badly.
The Fed under Ben Bernanke, the current chairman, is confident that it can "mop up" excess liquidity (though how one mops up US$20 trillion is questionable at best). More likely, the Fed – as all central banks do – will misjudge the advent of price inflation because the signals that indicate that price inflation has taken hold are all backward looking. In other words, by the time the Fed brain trust has figured out that price inflation has taken hold, it will be spread throughout the system making it difficult if not impossible to combat.
Because it is so obvious that the Fed has basically placed a ticking time bomb at the center of the world's economy, some have accused the Fed of intending to destroy the dollar reserve economic system on purpose. The logic is that the powers that be, the Anglo-American monetary elite that stands in the shadows behind the Fed, intend to replace the current system with a more globalized currency, perhaps run by the IMF. Using this logic leads one to the conclusion that the Fed is purposefully cooperating in its own demise and the demise of the currency it is supposed to protect and nurture.
In fact, such an outcome would be no surprise as the Fed has proven itself to be a vile manager of the US dollar, which has devalued by some 95 percent or more during the Fed's tenure. If the Fed is in fact putting itself out of business, it surely will not be missed. It has presided over the hollowing out of the American economy and the emphatic debasement of the currency via a series of disastrous booms and busts. There is almost nothing positive to say about the Fed except that its demise would surely be a blessing to the struggling, hard-working people of America who deserve better than this treacherous and deceitful organization.