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

Clean Money - John Rubino: Book review

Clean Money by John Rubino 274 pages. Hoboken, New Jersey John Wiley & Sons. 2009. 1st Edition. The bouyant stock market environment of the past several years is gone, and the financial wreckage of 2008 is still sharp in our minds as a new year starts to unfold. Given the recent across-the-board-declines in global stock markets (and most asset classes) that have left many investors shell-shocked, you might wonder if there is any good reason to consider the merits of a hot new investment theme, such as clean energy. However, we shouldn't be too hasty to write off all future stock investments. After all, the market declines of 2008 may continue into 2009, but they may also leave interesting investment opportunities in their wake. Which brings us to the subject of this review. John Rubino, author and editor of GreenStockInvesting.com , recently released a new book on renewable energy and clean-tech investing entitled, Clean Money: Picking Winners in the Green Tech Boom . In Clean

Slate profiles Victor Niederhoffer

Slate's recent profile of writer/speculator, Vic Niederhoffer has been getting some attention from traders and finance types in recent days. I thought we'd take a look at it here too, to offer up some possible educational value from Vic's experiences with trading and loss. Here's an excerpt from Slate's profile of Victor Niederhoffer : " I've enjoyed getting your e-mails. It sounds like you've thought a lot about being wrong. Well, the reason you contacted me, to call a spade a spade, is that I'm sort of infamous for having made a big, notorious, terrible error not once but twice in my market career. Let's talk about those errors. The first was your investment in the Thai baht, which pretty much wiped you out when the Thai stock market crashed in 1997. I made so many errors there it's pathetic. I made one of my favorite errors: "The mouse with one hole is quickly cornered." That is key. There are certain decisions you make in li

Seth Klarman: Margin of Safety (pdf)

Welcome, readers! Signup for free email updates at the Finance Trends Newsletter . Update: PDF links removed due to DMCA notice. Please see our extensive Klarman book notes below. New visitors, please check the Finance Trends home page for all new posts. Here's something for anyone who has been trying to get a look at Seth Klarman's now famous, and out of print, 1991 investment book, Margin of Safety .  My knowledge of value investing is pretty much limited to what I've read in Ben Graham's The Intelligent Investor (the book which originally popularized the investment concept of a "Margin of Safety"), so check out the wisdom from Seth Klarman and other investing greats in our related posts below. You can also go straight to Ronald Redfield's Margin of Safety book notes .    Related posts: 1. Seth Klarman interviews and Margin of Safety notes     2. Seth Klarman: Lessons from 2008 3. Investing Lessons from Sir John Templeton 4.