Is the Federal Reserve Bank Legal?

The Federal Reserve Bank was started in 1913 after the depression of 1907. While many scholars point to many technical reasons for its creation the main purpose came down to an attempt to eliminate the politics from financial decisions.

One of the big problems that has plagued the monetary system is that banks are required by regulation to hold only a small portion of money from depositors. When there is a blip in the economy, the banks have only a short supply of money and become unstable.

Without regulation banks would be on their own without any gaurantees from the Federal Reserve or government. Banks would be forced to hold on to much more of their depositor's money by their own business models. Loans and other services would be more prudent and less risky.

The Federal Reserve is charged with maintaining value of money, addressing economic panics, controlling interest rates, and supervising and regulating the banking industry, printing money, and bailing out banks in dire times. You can read more about the Federal Reserve and its purpose here.

The Federal Reserve is owned by the all the banks across the country and they contribute the funding needed to maintain the Fed.

A major problem of the Fed has been the pestilence of politicians who have weaseled their way into the system through regulation. These regulations benefit the politicians directly by generating funds for special interest in return for campaign contributions. Politicians use most of this money for re-election and donate small amounts to local groups in their districts to secure votes. These groups will then advertise their support garnishing more votes.

Another major problem is that the banks could never contribute enough money to keep the system solvent in a total meltdown. Each bank would have to contribute 100% of their deposits to keep the system secure. This is impossible because there would be no money to loan and no money for depositors to withdraw. The banks could not meet their operating cost and would not make any profit. In a serious recession as the one we are in now, the only option is to have the taxpayer bail out the unstable banks – which has and still is happening as more and more banks fail every day.

But is the Fed a legal entity?

Article I Section 8 of the Constitution of the United States of America states:

The Congress shall have Power… To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;…

The law clearly states and charges Congress with this responsibility. The law does not allow congress to discharge or out source its monetary duties. This is crystal clear.

The Federal Government has no business, by law, for bailing out banks, regulating interest rates, addressing economic panics, or regulating the banking industry. These issues belong to the states constitutionally and ultimately the individual financial institutions.

The Federal Government has grown too powerful because our politicians ignore law and make their own rules. As a result we are not protected by the law and are subject to the fallout created by self serving political aspirations.

The Federal Reserve is and has been a failure from day one. Not only does it not work, but the Federal Reserve has been a political focal point for generating regulations and political favors.

The Federal Reserve should be dissolved and all of the supporting players should be prosecuted for failing to uphold their oath of protecting and defending the Constitution.

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