Explaining the Federal Reserve

Our Federal Reserve Bank is in the news this week. So are survey results that less than 30 percent of persons polled understand one of our nation’s most vigorous institutions. Let’s clear up a few misunderstandings.

Originating with Alexander Hamilton, a Constitutional Convention delegate and author of “The Federalist,” today’s version of the central banking system was established 100 years ago by the Federal Reserve Act of Congress. It was uniquely designed as a blend of government appointees and member banks to stabilize our growing yet volatile economy.

Is The Fed owned by “private banks?” Is it a “private corporation?”

Profits are deposited in the U. S Treasury. Commercial banks do not exercise proprietary control. The 12 Reserve Banks are private corporations owned by the member banks, but monetary policy is the responsibility of political appointees on the Board of Governors.

Fed Chairman Ben Bernanke served on President George W. Bush’s Council of Economic Advisors before being appointed by President Bush in 2006. Chairman Bernanke supports reducing budget deficit not “keeping us in debt.”

Does the Fed set “ridiculous interest rates?”

Those are set by your bank, which does keep its profit. The current rate at which your bank borrows money from the Fed is less than 1 percent and has been for several years.

How is the value of our money “set?”

Not solely by the Fed. Since Richard Nixon took us off the gold standard in 1971, value is determined by demand for the dollar in the international money market and supply of the dollar, which is stabilized by the Fed’s monetary policy.

Does the Fed print money?

Congress created the U.S. Mint in 1792 to coin money. Then, in 1914, the Federal Reserve note (dollar bill) was printed by the U.S. Bureau of Engraving and Printing. Money supply is controlled in two ways, by Congress through fiscal policy and by monetary policy.

To quote Alexander Hamilton from “The Federalist,” "the vigor of government is essential to the security of liberty."

Cynthia Bennett

Newnan



More Opinion

It’s show time, er, fair time

With cooler weather starting to move in, you know it’s time for the Coweta County Fair. The annual event kicked off yesterday and will ... Read More


Enough with domestic violence

It started with a clip of a football player pulling his unconscious fiancee out of an elevator. Recently released additional video shows the ... Read More


Rants, Raves & Really?!?

A look back at last week’s highs, lows and whatevers: REALLY?!? Some members of the East Coweta High School Marching Band were burned ... Read More


Georgia Says

The Augusta (Georgia) Chronicle on unswerving ideals: He epitomized the expression "doing well by doing good." His chicken sandwiches made ... Read More


The president and ISIS

The greatest threat facing America is terrorism. Today, that terrorism shows its face through ISIS. They rape, torture and kill men, women a ... Read More

Take a moment

On this day in 2001, at 8:46 a.m. Eastern time, American Airlines Flight 11 crashed into floors 93-99 of the North Tower of the World Trade ... Read More