Skip to main content

The Founding of the Federal Reserve

Last week we spent a lot of time talking about the Federal Reserve, specifically the recent US Treasury-sponsored blueprint that would expand the Fed's regulatory powers and grant the central bank an official mandate to "stabilize markets".

In all the discussion over this recently-proposed framework, I hear very little mention of the fact that a privately-owned, or quasi-public, central bank (the Federal Reserve) is now being cast as a US regulatory agency.

With last week's proposal to reshape the Fed's role with increased oversight of the financial markets, the Federal Reserve is now seen as a lender of last resort to non-bank financial institutions, a regulator of financial markets, and a market stabilizing agent.

Just how did this amazing transformation take place?

To answer that question, I think we first need to look at how and why the Federal Reserve system came about in the first place.



To shed some more light on this topic, here is a video clip of Austrian economist Murray Rothbard giving a 1984 presentation entitled, "The Founding of the Federal Reserve".

There is much to hear in this presentation clip, but one of Rothbard's early main points is that our current central banking system was born out of a desire to cartelize the banking industry and allow for the creation of an ever-expanding (or, "elastic") money supply.

Now, most people would tell you that this is a good thing, as this is the message that most of us absorbed through the media, or were taught in school.

But, as with nearly everything learned in schools (or absorbed through the cloud of "conventional wisdom"), there is another, often overlooked, side of the debate.

I'll let Rothbard do the rest of the talking. I hope you'll find this material interesting and informative, and share it with others who might find it useful as well.

Popular posts from this blog

Jesse Livermore: How to Trade in Stocks (1940 Ed. E-book)

If you've been around markets for any length of time, you've probably heard of 20th century supertrader, Jesse Livermore . Today we're highlighting his rare 1940 work, How to Trade in Stocks (ebook, pdf). But first, a brief overview of Livermore's life and trading career (bio from Jesse Livermore's Wikipedia entry). "During his lifetime, Livermore gained and lost several multi-million dollar fortunes. Most notably, he was worth $3 million and $100 million after the 1907 and 1929 market crashes, respectively. He subsequently lost both fortunes. Apart from his success as a securities speculator, Livermore left traders a working philosophy for trading securities that emphasizes increasing the size of one's position as it goes in the right direction and cutting losses quickly. Ironically, Livermore sometimes did not follow his rules strictly. He claimed that lack of adherence to his own rules was the main reason for his losses after making his 1907 and

New! Finance Trends now at FinanceTrendsLetter.com

Update for our readers: Finance Trends has a new URL!  Please bookmark our new web address at Financetrendsletter.com Readers sticking with RSS updates should point your feed readers to our new Finance Trends feedburner .   Thank you to all of our loyal readers who have been with us since the early days. Exciting stuff to come in the weeks ahead! As a quick reminder, you can subscribe to our free email list to receive the Finance Trends Newsletter . You'll receive email updates about once every 4-8 weeks (about 2-3 times per quarter).  Stay up to date with our real-time insights and updates on Twitter .

Moneyball: How the Red Sox Win Championships

Welcome, readers . T o get the first look at brand new posts (like the following piece) and to receive our exclusive email list updates, please subscribe to the Finance Trends Newsletter .   The Boston Red Sox won their fourth World Series title of t he 21st century this we ek. Having won their first Se ries in 86 years back in 200 4, the last decade-plus has marked a very strong return to form for one of baseball's oldest big league clubs. So how did they do it? Quick background: in late 2002, team own er and hedge fund manager, John W. Henry (with his partners ) bought the Boston Red Sox and its historic Fenway Park for a reported sum of $ 695 million. Henry and Co. quickly set out to find their ideal General Manager (GM) to help turn around their newly acquired, ailing ship. This brings us to one of my fav orite scenes from the 2011 film , Moneyball , in which John W. Henry (played by Ar liss Howard) attempts to woo Oakland A's GM Billy Beane (Brad Pi