The Federal Reserve, how federal is it?

Luckily Ben Bernanke and the his FED saved us from a second great depression.
At least that is what they want us to believe, but did they?

The American central bank did nog help us out, they did what they always do during financial meltdowns: pump money into the system.

When the dotcom bubble deflated the FED decreased the interest rates to 1%. They kept their interest rates on 1% for a very long time.

Now we are wondering why there are so many sub-prime and Alt-A products sold in the USA? Well, this is why!
Banks thought to become rich easily, being able to lean money for 1% and to lean it to other people for 6% is lucrative business.
The banks became rich because of the infinite moneyflow going to them for just 1%.

When we say the FED avoided the crisis, let's not forget to mention the FED was also a big part of the cause of this crisis.

The name of the FED - Federal reserve suggests that the bank is controlled by the government. But is this right?

Actually the FED is privately owned. The shareholders of the FED are private banks. The government does not have any shares in the Federal Reserve.

"Some people think that the Federal Reserve Banks are owned by the United States government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and foreign customers; foreign and domestic speculators and swindlers; and rich and preditory money lenders."
Louis McFadden, Chairman of the House Banking and Currency Committee in the 1930's.

So how was the FED created and why did the government agree with it?

The FED is created by seven top-bankers, led by John Pierpont Morgan (the founder of JPMorgan chase) who had a secret meeting at JP Morgan's private Island.
Those seven top-bankers represented banks that owned around 25% of all worldwide assets.

The bankers wanted to receive a monopoly for dollarcreation and wanted to make a central bank to the European model.

They thought of a reliable name which would sound like the bank was owned by the government and came up with: 'The Federal Reserve'.
Because of politician-friend the plan got through the house of representatives. The vote for the Federal Reserve plan was planned on Christas eve , this was done by purpose because a lot of people would not be there to vote.

Since the plan was written in difficult economic words and was written to not be understood by anyone who did not study economics the politicians available were not able to fully understand what they were voting for. Off course, all people who were involved in the plan were there on christmas eve to vote in favour of the plan.

The FED was a fact.

Let's get back to when the current global financial meltdown started.

In March 2008 the NY FED advanced the funds for JPMorgan Chase Bank to buy investment bank Bear Stearns for pennies on the dollar.
Turned out that the CEO of JPMorgan Chase, Jamie Diman, sits on the board of the NY FED and anticipated in the secret weekend negotiations.

So JPMorgan Chase was able to buy Bear Stearns for pennies on the dollar, and this dicision has been - partly - made by the CEO of JPMorgan Chase?!!!

Now that's a deal !!


So if the FED is not state-owned, where did they get the money from to advance the funds?

According to the associated press:
"The treasury department, for the first time in it's history, said that it would begin selling bonds for the Federal Reserve in an effort to help the central bank deal with it's unprecedented borrowing needs."

Yahoo finance reported:
"The treasury is setting up a temporary financing program at the FED's request. This program will auction treasury bills to raise cash for the FED's use. The initiative aims to help the FED manage it's balance sheet following its efforts to enhance it's liquidity facilities over the previous few quarters."

But it's not like the United States have savings left..


So government debt is used to allow the FED to take over the banks, but this is not the only thing the FED does to regulate and control the control the economy.
The FED has mentioned a few times that they "support" the financial markets.
Even in Oktober 1989, Robert Heller, governer of the American central bank, said in an article in the Washington post that the FED was "interested in supporting financial markets by buying futures."

In an acticle published by Reurters in June 2003 Alan Greenspan went even further. He stated that the measures once not acceptable - like the regulations in financial assets - might become normal.

Where is this world heading?
At school we always learn economists regard a free-market system to be perfect. Where is the the free market within those regulations in financial assets and takeover of banks?

I think it is far, far away...