The Federal Reserve System, The Federal Reserve Bank of New York and The Conspiracy Theory
The Federal Reserve Bank of New York
(Scroll down for the conspiracy theory)
What is the Federal Reserve?
The Federal Reserve is a central bank. A central bank is an institution meant to regulate the economy of a given country. It issues the national currency and decides on interest rates, thereby controlling money supply. Central banks are usually state owned (but not in the US).
In the United States, the function of the central bank is assumed by the Federal Reserve System, or “Fed”. It’s called a system because it goes like this:
Commercial banks are shareholders of 12 Federal Reserve Banks each assigned a territory or district, together covering the entire nation (district 1 is covered by the Boston Federal Reserve, 2 by the New York Federal Reserve Bank, 3 by Philadelphia, 4 Cleveland, 5 Richmond, 6 Atlanta, 7 Chicago, 8 Saint Louis, 9 Minneapolis, 10 Kansas City, 11 Dallas and 12 San Francisco.) A board of governors (appointed by the President and approved by the Senate) makes the decisions, assisted by a Federal Open Market Committee and a Federal Advisory Council.
Within this system, the Federal Reserve Bank of New York (FRBNY) has specific responsibilities. It conducts open market operations (buying and selling of government securities to influence the availability of credit in the economy). It also represents the treasury in international monetary transactions.
The FRBNY is located in Manhattan's financial district, not far from Wall Street. Its impressive vault shelters the gold reserves of many foreign countries. (You can actually visit the vault. Book a tour just like Robyn does in the novel.)
For a moment she felt she had the upper hand. He looked dumb-struck enough for her to consider running for it.
Except she was eighty feet below street level, fifty feet below sea level, locked inside an airtight steel vault. Beyond the two doors, the only exit was through a ten-foot-long steel passageway presently angled ninety degrees inside the bedrock of Manhattan.
“The passageway is operated from a distance and lowered three-eighths of an inch to ensure the vault is air- and water-tight,”Mack said.
Foreign gold bullions in the FRBNY vault, safely stored eighty feet below street level.
The conspiracy theory:
The Fed is controversial in the United States for several reasons:
The Fed is a private entity
Contrary to what its name may suggest, the Fed is not a governmental entity, and that’s the toughest challenge the Fed creates to our democracy.The twelve banks that form the root of the system in a cartel manner are privately owned, and by law, their ownership does not have to be disclosed. So it’s not. This raises many questions and speculative thinking, and we’ll never know for sure whether the US financial system is in fact governed by foreign interests or by a group of individuals serving their own private interests. We get that the decisions are made by the board of governors, but wouldn’t it be simpler to just disclose who owns the banks who own the system? Sure it would. But it’s not…
And wouldn't it be much healthier to hand back the privilege of emitting money to the Federal State?
The Fed’s decisions have a huge impact on our lives:
For instance, the Fed decides on interest rates—at what price will they lend money to commercial banks? This governs the interest rates these banks will in turn charge their customers, directly impacting the consumers’ buying power, their access to housing and other goods, and thereby the state of the economy. Wall Street is closer to Main Street than we may realize. There is a natural tendency in any genuine democracy to dislike that the decisions made by a handful of highly privileged men can directly impact the access to jobs and housing of the multitude.
Do we need a central bank?
Not necessarily. The United States didn't always have a central bank. The Fed's job is to guarantee economic stability. The Fed started operating in 1914... We've had times of prosperity before, with and without a central bank, and we've had recessions since the inception of the Fed.