Does the Fed’s 110 Year Job Performance Merit Its Continued Grant of Congressional Authority to Act as the Government’s Banker?

17 Pages Posted: 8 Oct 2022

Date Written: September 5, 2022

Abstract

The Fed has been in existence since 1913, when the U. S. Congress issued a charter for the private bank to act as the government’s banker for managing the nation’s supply of money and buying and selling government debt.

The Fed operates as a private for-profit bank. The Fed is not an agency of the government, but functions as the banker for the U. S., Treasury Department.

In Lewis v. United States, 680 F.2d 1239 (1982), the U. S. Supreme Court ruled that the Federal Reserve Bank is,

"Independent, privately owned and locally controlled corporations", and there is not sufficient "federal government control over 'detailed physical performance' and 'day to day operation'" of the Federal Reserve Bank for it to be considered a federal agency.”

From the time that the Fed was created, the U. S. economy has suffered a financial panic and economic collapse about every 10 years. This series of periodic, empirically observable cycles of economic collapse is not happenstance, serendipity, or a normal, expected outcome of the workings of a free market economy.

During each economic collapse, middle and working class citizens lose their jobs, incomes, houses, and farms, while the Ruling Class escapes unharmed, because the Fed bails them out, and makes them whole.

We explain the dismal economic performance of the Fed by placing their performance within the social class conflict thesis that the Fed acts for the benefit of the American Ruling Class.

Keywords: The Fed, economic collapse, ruling class, working class

JEL Classification: E00

Suggested Citation

Vass, Laurie Thomas, Does the Fed’s 110 Year Job Performance Merit Its Continued Grant of Congressional Authority to Act as the Government’s Banker? (September 5, 2022). Available at SSRN: https://ssrn.com/abstract=4210517 or http://dx.doi.org/10.2139/ssrn.4210517

Laurie Thomas Vass (Contact Author)

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