Ownership of the Federal Reserve Bank

An anonymous poster asked me about the ownership of the Federal Reserve Bank and without doing a lot of research I found an interesting post by Professor Edward Flaherty of the University of Charleston.  Flaherty debunks the claim that foreigners or the Rothschilds control the Fed. That is silly.  But equally silly is Flaherty's claim in the following sentence:

"The New York Federal Reserve district contains over 1,000 member banks, so it is highly unlikely that even the largest and most powerful banks would be able to coerce so many smaller ones to vote in a particular manner. To control the vote of a majority of member banks would mean acquiring a controlling interest in about 500 member banks of the New York district. Such an expenditure would require an outlay in the hundreds of billions of dollars. Surely there is a cheaper path to global domination."

While coercion is a loaded term, Flaherty displays a lack of understanding of basic political and interest group processes.  Typically, democratic processes yield a small number of controlling or influential parties.  Robert Michels first called this process the iron law of oligarchy in a book on political parties (specifically the Socialist Party of Germany, which at the time was considered highly democratic) and it has been examined by Mancur Olson on the public policy level in his book Rise and Decline of Nations.  


While it is silly to claim that the Rothschilds or some cabal of Jewish or British bankers controls the Fed, it is equally silly to claim that the big money center banks do not influence monetary policy.  Since 2008 we have witnessed Goldman Sachs largely dictate national spending policies.  Flaherty's claim that ordinary political processes do not apply and that the large banks lack influence on the nation's monetary policy, given the trillions of dollars just printed and handed to them, is wrong. 


Monetary policy favors the commercial banks and by definition the big commercial banks get the most juice from the Fed's monetary expansion.  That doesn't mean that there's a conspiracy of international bankers, Jewish, British or otherwise, nor does it mean that there is a a conspiracy of big US banks.  It just means that money center banks control a disproportionate share of a monetary system that is designed to subsidize banks in general. The bigger banks benefit more than do the smaller banks, and they do more damage because they tend to be more speculative. The Mexican and Latin American debt crisis; the Hunt silver speculation; Enron; Long Term Capital Management; and the sub-prime crisis as well as the century old merger mania that has reduced American business's creativity are all due to the money center banks.

The banks and financial interests benefit and you lose. That is built into the system that American voters have supported.  If you insist on voting for one of the two major parties every time, you are supporting the system.  Voters have themselves to blame, not a conspiracy.