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...
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