The answer to the first question is 'sort of'. The answer to the second
question is no. The effects of having an institution with the power to
manipulate interest rates and the money supply at whim are equally pernicious
whether the institution is privately or publicly owned. However, if you
strongly believe that the government can not only be trusted to 'manage'
money and interest rates but is capable of doing so to the benefit of the
economy, then please contact me immediately because I can do you a terrific
deal on the purchase of the Eiffel Tower.
The fact is that the Federal Reserve would be a really bad idea regardless
of whether it were privately owned or owned by the US government. The
question of ownership is therefore secondary and the people who stridently
complain about the Fed being privately owned are missing the critical point.
In any case and as I explained in an article way back in 2007, the Fed is not privately owned
in the true meaning of the word "owned". For all intents and
purposes, it is an agency of the US Federal Government.
In addition to the work of G. Edward Griffin referenced in my above-linked
2007 article, useful information about the Fed's ownership can be found in a 2010
article posted at the Mises.org web site. This article approaches the
Fed's ownership and control from an accounting perspective, that is, by applying
Generally Accepted Accounting Principles (GAAP), and concludes that:
".the Fed, when tested against GAAP as the Fed itself uses it in
the Fed's assessments of those it regulates, is a Special Purpose Entity of
the federal government (or, according to the latest definition, is a Variable
Interest Entity of the federal government). The rules of consolidation
therefore apply, and the Fed must be seen as controlled by federal
government, making it indivisibly part of the federal government. The
pretence of independence is no more than that, a pretence.
There is, however, no denying that the banks have tremendous vested
interest in influencing the policies of the Fed, nor that the power being so
narrowly vested in the president makes him a special target for influence.
Still, the power to control the Fed is not in the hands of its
"owners" but firmly in the hands of the federal government and the
president of the United States."
It is clear that the Fed was established by the government at the behest
of bankers with the unstated aim of facilitating the expansions of the
government and the most influential banks. It is effectively a government
agency, but due to the influence that the large banks have on the government
it will, if deemed necessary by the Fed Chairman, act for the benefit of
these banks at the expense of the broad economy. The happenings of the past
eight years should have left no doubt about this.
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