Federal Reserve News

Most people think of the Federal Reserve as a government agency. This is supported by several bits of evidence, including the Fed website having the ".gov" suffix, the close cooperation we note in news stories between the Fed and the U.S. Treasury, etc.

On the other hand, I have been told that the national banks who are members of the Federal Reserve System are the owners of the Federal Reserve. The relationship is obvious, made visible by the absence of people from firms outside the Fed member banks among the leaders, the governors.

If I were privy to which way the flow of authority or control moved, this would all be much more clear. However, I have not found unambiguous evidence to support either option. One might think the U.S. Treasury decides and the Fed follows. However, the main weight of power from the Treasury side would only consist of the government's need to borrow or to repay, sell bonds or redeem them. The Fed, on the other hand, carries out the transactions required, such as being the buyer of last resort when Treasury notes, bills or bonds are being sold.

Furthermore, the other activities of the Fed, which appear to just control the monetary system at the government's behest, are primarily expressed in managing the money supply through the printing press, but more importantly through increases or decreases of credit. The primary beneficiaries seem to be the banks. The government benefits secondarily by the final effect of money expansion: repaying debt with cheaper dollars.

I wanted to start researching the ownership question, but have come up with little hard fact to get me started.

Any ideas out there?

Peter