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Politics, Videos

What is the Federal Reserve? Do we need it?

Posted: January 14, 2013 at 6:09 am   /   by

We are not, at this juncture, taking a position on ending The Fed, or on the gold standard, or monetary policy generally. That said, this video provides an excellent primer on what The Fed does and an interesting perspective on other potential ways in which those same functions might be accomplished.

What would it mean to “end the Fed”? Professor Larry White says that in order to know the effects of such a measure, we must first understand the role of “the Fed”.

The Federal Reserve is the central bank of the United States and the institution at the center of the nation’s monetary and banking systems. It has five main functions, including controlling monetary policy. Could the United States even survive without the Federal Reserve?

In order to answer this question, Professor White examines countries throughout history that did not have an established central bank, including Scotland, Sweden, Switzerland, and Canada. Hong Kong, he points out, still does not have one. So who performs the functions of a central bank in these countries?

Professor White cites private institutions, including clearing house systems, banks, and financial companies, as the main actors in the monetary systems of countries without a central bank. Ultimately, Professor White concludes that the Federal Reserve is not necessary. Evidence shows that nations can survive without a central bank. What the Federal Reserve does well can be done even better by private institutions, and the institution is capable of serious errors.


  1. SaddenedOne says:

    The Fed is a private central bank. It is nothing like what we had in previous setups. The Fed is part of biggest problem we have, and one of the best examples of private sector pulling the puppet strings of government, and then blaming the government, when the 12 banks that make up the coalition overextend or spend the money of the taxpayers. Every dollar issued, is issued with debt that costs more than the dollar is worth, so we can never truly catch up. We just won’t call a spade a spade, or fraud a fraud. The private sector won’t change, unless the citizens wake up, and demand it.

    1. @SaddenedOne Your comments in this and other posts are definitely following an anti-private theme.

      1. SaddenedOne says:

        @WesternFreePress Anti-oppression, perhaps. Anti-corporatocracy, certainly. Values should be treasured, not sold. Values that shift, like liberty for one does not equal liberty for another, or fiscally conservative here, but fiscally loose here, is problematic, and non-conservative in the long run, if we take conservative in its more traditional definition and practice. Is there issue in my comments? I find the practices of the Fed Reserve to be inhibiting to the freedom and forward progress of this nation. I feel the banking industry, and credit industry, have the American, and world as a whole, in willing, in some, and unwillingly, in most, shackled in slavery. I feel that practices of days past, could bring us to glory again, in ways that do not come painted in blood. With the oppression that was admissible in the past, gone, we could be a more perfect union, that balances the rights of the individual, with that of the states… the individual is supposed to be protected by the federal system, that is why they, and not the states, give us our bill of rights.. The states can build upon it, but they can not take away.. Traditionally though, the arguments that have been breached on the topics I have spoken on, were wronged by the conservative types.. Radicals, not moderates or conservatives, took up the cries and causes that are breached in the articles on gun control, and on what is and is not oppressive to the people. There was a fair portion of conservatives in this land, before we had the revolution… those were the people killed, and chased into Canada, as the war unfolded..  The radicals took away their guns, and their land, and told them to conform to the new rules. If one did not find that acceptable, too bad.. The radicals then pressured the anti-federalists, and moderate supporters of the federalist proposal into a series of illegal meetings after it was deemed that the system in place was too unstable, too prone to inefficiency and lapses of common interest… Add to that the issues in recent memory, of the conservative government cracking down on dissidents, misusing private space, and using values to take away the rights of the citizens of their nation, lead to the addition of the bill of rights… Their document was a living document, that has blended with myth, and with progress, as America has established her way. The paradoxes and whitewashing of history, and of values, to get political points and positioning, is what is bringing us down, and keeping us from being the proud, and strong nation we can be, and should be.. Instead of embracing science and arts, rationale, and public planning, education, morality regardless of religious background… items that were once embraced by the conservative side.. we find conservatives rallying against diversity, against taking people as they are not what we want them to be, against education, against infrastructure that will lead to more independence… and find them into the hands of big business, not the mom and pop businesses that we built up, in the golden age of our industry… We had a poor record on human rights, and on tolerance, but we used to encourage local industry, on personal advancement, and on giving a man a chance to show what he was worth (albeit race, class, and educational background were qualifiers.). Now we have been divided and conquered, the very words of the document that protects us, establishes us, is used to break us, and bind us to the sins of our fathers. Private banking was rejected several times, as were banks that risked the money of their patrons… Now we have people controlling our money, and printing it privately, without direct oversight by the citizenry, or even someone directly picked by our people, or through the representative process we have, outside of limited oversight through Congress, with very little ability to affect things, until it is clean up time. With foreign policy undermined by our “intelligence groups,” Immoral and suspect military maneuvers that have robbed other nations of their sovereignty, liberty, and quality of life, and private businesses who are being incompetent investing in our elections to affect the outcomes over the will of the electorate. We live in an opt in democracy.. Making people so sick and tired, or agitated enough to avoid the polls, is an accepted strategy, by professional and grassroots activists. That is a sign that democracy is being leeched from us. We deserve better, and it is in our hands to do so.