by Bill Parks

Created on: March 23, 2009

Should the United States abandon the Federal Reserve?

Like an evil villain in an old time melodrama, only the villain having the knowledge of the secret code needed to disarm the bomb that is about to explode, the Federal Reserve System is a pivotal player in America's central banking system, inextricably woven into the fabric of our nation's economy and fundamentally responsible for the current financial and economic crisis, but impossible too get rid of without creating economic havoc. Considering the many vital technical functions of the Federal reserve, overseeing banks, routing checks, distributing currency, to name a few, the United States government cannot simply abolish the institution.

Shrouded in deliberate mystery as to its identity, the Federal Reserve has this to say about itself, "The Federal Reserve System is not owned' by anyone and is not a private, profit-making institution. Instead, it is an independent entity within the government, having both public purposes and private aspects." The term "private aspects," is undefined. Although the Federal Reserve in Washington may not be owned by anyone, the twelve regional Federal Reserve Banks that control it are owned by the individual member banks within those regions, and individual member banks are private, profit-making corporations. Thus, the Federal Reserve Banks are privately owned.

Completely doing away with the Federal Reserve is not in the best interest of the US, but, on the other hand, the government has other options. Nationalizing the Federal Reserve and making it a part of the government as a subsidiary of the treasury department would maintain its mundane functions necessary to the operation of the banking industry, reduce the national debt by assuming ownership of the US government bond in its possession while repealing the federal Reserve's authority to issue money. Like defusing the bomb in melodrama saved the day, the government repealing the Federal Reserve's power to issue money would reclaim that authority to the government itself.

The sovereign authority of the United States government to issue all the money needed in the economy is the real key restoring our nation and our economy.

Crushing economic devastation occurs when a privately owned banking system is permitted to create 98% of the money in the economy. The banks create money as debt, issuing it into the economy in the form of loans that must be repaid with interest, creating only the principal but none of the required interest,

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